The most memorable lesson that we SHOULD have learned about both the Great Recession and the first quarter of 2016 is that they ended and markets recovered far more quickly than anyone anticipated.
If you were one of those unlucky folks who panicked and sold their holdings or even if you just spent a great deal of time worrying, worrying, worrying; you had lesser outcomes (either in terms of portfolio performance OR in terms of life stress) than folks who simply believed in their plan, maintained their diversification, and kept dollar cost averaging.
No one has any insight either into what piece of news will break next or into how the market will react to that news. There is no marker to tell us when markets will move up in the immediate, unknowable future and no marker that will reliably indicate when it will go down.
We simply cannot make investment policy out of market chaos.
If we have a plan we believe in, we must sit patiently as challenges to our plan mount and continue the disciplines of Dollar Cost Averaging, Asset Allocation, Diversification, & Rebalancing until the challenges pass.
The sooner we come to terms with the anxiety, the more successful we may be.
Related Mindful Money Minute Videos:
- What is Financial planning?
- How does Financial Planning integrate with Portfolio Design… exactly?
- Market Volatility is Market Reality! (August 2015 edition)