Investing can be hard, very hard, given the swings in the market each day. Without a strategy and philosophy that has personal meaning to you, staying the course and not being scared out of the market is difficult. It’s ok to be anxious and even fearful but acting on those fears is where trouble begins.
“Money is like soap…”
One solution to the worry is to properly understand your individual ability to deal with the inevitable point in the future when stocks (temporarily) decline. It’s self-defeating to continually adjust your long-term portfolio to current events since you are investing for something beyond today. As Nobel Winner Professor Eugene Fama puts it, “Money is like soap; the more you handle it, the less you have.” Constantly tinkering and moving in and out is clearly not the path to achieving what you want financially.
A Plan to Ease the Anxiety
As I write this, the search is continuing for the missing Malaysian airplane. Perhaps by the time you read this, the mystery will have been solved. What has been interesting is the hundreds of “experts” that the media has uncovered for this story, many with their own theories on what happened to the plane. Sometimes, investors do much the same thing as they bounce around from one theory of investing to the next. Is one theory as good as another? We clearly believe this is not the case.
There is substantial academic research on the markets and investing that repudiates most of what is portrayed to the public each day by the traditional financial services firms. The media is complicit in this as well, since they have so much time and space to fill. The Science of the Markets or Asset Class Investing is theory that has been borne out over decades of research. That is the path we follow. Just having an investing theory or philosophy that you actually use will ease the day-to-day anxiety. Give it a try.