August 24th, 2015 And The Stock Market Tumble

It’s Easy To Panic With Markets Dropping So Quickly

 

This headline reminds me of the recent Ebola scare we had in the USA. The great majority of the population panicked, lots of different departments blamed each other and people were furious that US citizens infected were being brought back to be treated. The media of course had a blast with it and took it for a nice spin. Before long, the dust settled and now my only reminder is a recent case of long-term visual problems after Ebola infection.

 

900px-PPE_Training_(2)
PPE Training (2)” by CDC GlobalPPE Training. Licensed under CC BY 2.0 via Commons.

 

Your Investment Plan

My point is that information is very easy to come by. Of course if you are listening to news sources it’s thrown at you left and right. If you are more careful about your exposure to ‘news’ then you may have stumbled on the recent dip in stock prices. It’s critical that you know what to do with such information.

 

VTSAX as of 8/24/2015
VTSAX as of 8/24/2015

 

If you have an Investment Plan then you know exactly what you are going to do when you come across something like this. Many of us who are still new to the game are checking prices regularly, wondering if we should buy some more of investment XYZ or perhaps even just cashing out and exiting the market all together.

 

Passive Index Investing

Though I am not the biggest fan of passive index fund investing I am nevertheless one of its many followers. It’s simply the easiest thing to do and I’m still relatively new to the world of Wall Street investing. I realize that in the long run profits in index investing will drop because it has become quite popular. However, for the time being it’s a solid plan.

 

So, back to the beginning of this post. Should you worry about the recent market changes? No. Markets go up and they go down. They even sometimes ‘crash‘. What you should be worried about is that investment plan, your investment statement. If you have chosen the buy and hold method then that’s exactly what you should focus on. If you are a market timer well then you don’t need me to tell you that you should care about this recent drop a lot.

There are many different strategies out there that work. Some consistently create great returns with a lot of effort, some create steady returns with almost no effort and then there is everything else in between. This is the time where you should revisit your investment plan and remind yourself what method you chose.

I do have some cash on the sidelines. I even thought about investing it because equities are on sale right now based on my own personal investment plan. However, I’ve seen enough of these ups and down that I don’t care to deviate from my auto-pilot investing.

 

In The Long Run…

What I know is that the market right now is going down. It may go down further, it may recover quickly. It may stay like this for 5-10 more years, or it may stay down for a few weeks/months and all of a sudden rally back up to newest highs. What I know is that in the long run these index funds will go up and I’ll have plenty of time to come up a more profitable investment plan. Don’t be a passive sideliner, educate yourself! Read as much as you can about the things that matter to you. Once you find one strategy read multiple opposing arguments to that strategy and I assure you that you are smarter than anyone else out there when it comes to deciding what is right for you.

 

  • Have you done anything different in light of recent market changes?
  • What’s your investment strategy?

Share your thoughts...