There are three things that are guaranteed in life – taxes, death, and stock market volatility. Keep in mind, volatility goes both ways – up and down. While last year at this time investors were riding out the greatest drop in the stock market to start a year, this year, they are in the midst of a bull market. At Track Ninja, we manage downside volatility with a thoughtful globally diversified allocation of low-cost funds. Keeping perspective with almost everything in life is important. It is extremely important when emotions come into play. Emotions tend to run high with kids, the purchase of real estate, and money (among other things). The most recent article published in ColoradoBiz Magazine by Kevin McNab, our president, touches on taking emotions out of investing and focusing on what can be controlled. Unfortunately, many investors do not have a plan which creates additional stress.
Stock market volatility in the first quarter of this year has shaken investor’s confidence. The media is fear-mongering and investors are worried. The not-so-distant recession still haunts investors. Money is emotional, and fear can come from lack of knowledge or preparation. Keeping perspective may be the single most important attribute for an investor to mitigate mistakes. Investors have trouble keeping perspective for the long-term after a decade of underachieving returns, volatility, and the recent declines in the markets. The psychology of investing dictates that investors remember periods of declining returns and the most recent volatility rather than periods of high growth and the overall increase in returns over a long period of time. It is human nature. Here are some things to consider.