Stock market news is not good today.
Stories like this have been circulating like crazy.
“If your pension, retirement savings or 401k is invested in the stock market, you will likely lose big today.”
The stock market is posting negative short-term returns and news about it has stirred emotions.
When reading day-to-day headlines, however, try to keep this cartoon in mind.
Source: Micheal Ramirez cartoon from 2009 and more recent Ben Carlson tweet
In sending this around, I’m not suggesting that the issues that drive market performance should not be evaluated and discussed.
What I am saying – again – is that market shocks occur much more often than many people might realize.
As an example, the headline that I quoted above is from a post that I wrote in 2015.
To help drive this home I’m including a chart that was previously sent around by Michael Batnick, who kindly gave me permission to use it. The title of a Tweet that he sent with this was spot on – “It is always something.”
As the illustration details, every few months an event creates concerning headlines.
Market drops that accompany bad news tend to not last that long, but they can stick in our memory, and can create the emotions in the chart below over and over again.
I’ve posted this chart many times before and I’m not immune to these feelings myself. I’ve never met a human who is. It is why I have this chart on my office wall.
It’s also one of the many reasons that we work hard to Keep a Steady Hand on the Tiller and, as we just did a little over a week ago, trim equities when the market is up by a larger than normal amount.
We didn’t make these moves ahead of the recent market drop because we are good at making predictions (no one is – particularly related to down markets).
We did it because we stick to investment policy plans that we have developed for clients, which create a disciplined process of taking chips off the table after strong runs.
As I wrote in the Steady Hand post that I mentioned above, our simple message remains the same.
Today is bringing a market storm and, as they have many times before, conditions might continue to generate concerning stories.
When they do – not if – try to stay anchored on the following, which is The Normal.
Every day will not be a good one in the stock market or in life.
True long-term investors, however, have been consistently rewarded with good returns when they stay focused on their long-term plans.