My Perspective on Money

The market has been going down almost every day so far in 2016 and I don’t care.

Maybe I should care, but I have arrived at a peaceful place about money over the last year, that honestly I thought would be more challenging for me.  Admittedly, I don’t like to see the value of our portfolio go down every day, as it is certainly more fun to see bigger values than smaller values.  But if you do not take money out of the principal, why does the daily value matter?

One of my strengths is activator.  So when the market is down a lot, I want to do something about it.  Thinking you can time the market – like get out and then get back in at the exact right time has never been done by anyone over a long period of time, so this is not a good strategy.  I can buy into panics, knowing that it will be pure luck if I catch the low point, so I always keep some extra cash so that I can nibble away at companies that are being given away too cheaply.  The market now is panicky, but we have seen this movie, many, many times before.  When this happens, emotions run wild and people who were positive just two months ago, now think the world is coming to an end.  Will anyone ever buy another barrel of oil, probably, yet the oil markets act as if no one ever will.  Will anyone ever buy insurance again, probably, but insurance stocks are trading at near historic lows of 6 or 7 times earnings.  Yesterday, I turned dividend reinvestment back on in our main investment account and I refined my shopping list of individual companies that look too cheap.

Shifting mindset to think, wow, I can buy some really good companies at a much lower price than I could two months ago is key to success.  And then not beating yourself up if the market goes on sale even more.  If I have learned anything about the market over the past 35 years it’s this, the market often goes to extremes in both directions that are irrational.  It goes too low, which creates opportunity, and it goes too high, which creates nice portfolio values, but limited opportunity.

Lot’s of so-called experts are saying “beware of trying to catch a falling knife,” but the problem with this is you don’t know where the floor is.  In other words, it is an excuse to never buy on sale.  My shopping list is ready, some I may purchase too early, but I am finally finding great opportunities for the long run.

Buckle in for a wild ride again today!


A Boomer In Transition

2 thoughts on “My Perspective on Money

  1. Sage advice Dean. Emotions and emotional responses to money are challenges for almost all investors. You frame the perspective well.

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