So this morning, my financial adviser called to see if I was doing OK.
Well, I had thought I was doing OK, but when you get a call like that…
But seriously, he was just checking to see whether I felt like I needed to do anything in light of what was happening in global markets. (He wasn’t urging me to do anything; he was just basically doing a pulse check with clients in light of all the alarming news out there.)
No, I didn’t. Want to do anything, I mean. This, of course, isn’t about me having nerves of steel. This is about me not thinking about money stuff at all, and not wanting to think about it. And to do something, you’d have to think about it, right? Most of the time, I forget that I have investments, because it’s money I’ve never seen — it was taken out of my paychecks before I ever had it — and which I won’t see for years to come.
Nevertheless, I did think about it a little, and the way I thought of it is this: So suppose some small portion of my retirement money is “exposed” in a class of stocks that is particularly hard-hit in the current situation. Well, I am the very opposite of a financial whiz, but it seems to me that that would be the very LAST situation in which you’d want to unload those stocks. I mean, why wouldn’t you wait until everybody was celebrating how awesome that sort of stock was, and clamoring for it, and then sell? (In fact, if I had any cash, which I don’t, I might want to buy a little more of it…)
That’s what I think anyway, when I think about it. I’m going to stop thinking about it now.
You?
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Um, buy and hold, and periodically rebalance. Never try to time the market, and certainly don’t sell in a downturn.
Yup. You nailed it. Unless of course you’re one of those people hooked into computer networks that can get info on stock sales a milli-second faster than others so you can exploit tiny differences in stock prices, which with large volumes of money makes you rich. I’m not one of those people.
“TURN THOSE MACHINES BACK ON!”
This is not 2007.
It’s not even 1998. This is a China valuation problem. Why everyone else is going bonkers is mystifying – if anyone else is going to get hurt it is more likely to be the Eurozone than the U.S. For every losing sector there will be off-setting winners. Maybe not 100%, but a whole lot more than the 0% the market seems to be assuming.
What Katherine said. I long ago set my 403b investment strategy, and see no reason to change it at all. After the past four days, the S&P has just nosed into correction territory, a place it’s actually been way overdue to enter. Earlier today I checked my equity allocation, and I was still slightly overweight (I follow the 110 minus my age rule of thumb, and put all new money into stocks), so I’m not making any changes. The bulk of my funds are in bonds, real estate, and an annuity, and the equities are in index funds. I’m getting close to retirement, which makes me a little bit nervous, but I’m looking at three years and a lot more accumulation, perhaps at bargain rates. As Buffett says, nobody complains when hamburger goes on sale.
Shouldn’t a financial advisor be telling YOU what to do? I mean, what are you paying him for? If you said sell, would he have done it?
Actually, I’m trying to leave him out of it, because I was told once (by a previous financial adviser) that it was a big ethical problem for him if I ever wrote about what sort of advice he gave. I don’t fully understand why, but I try to respect that.
He was mainly calling, I think, in case I was nervous and wanted to talk. He probably has clients who get that way…
I’d want a financial adviser who will call me BEFORE the big drop happens. Those are the guys who earn their money. What skill does it take to react AFTER? If they aren’t able to predict a 5% drop based on macroeconomic data they have at their disposal, what are they doing?