You can’t afford to miss the boat, especially when it comes to making money. But it happens all the time with investors. They let inertia slow them down, arriving at the docks too late or deciding not to take the voyage at all. They end up doing nothing for years on end. That’s not investing.
Countless studies show that simply missing the best handful of days in stocks in any given year can be detrimental to one’s portfolio. Sure, you might feel good missing the latest slide in stocks, but we’ve been in this bull market run for a long time. It’s not a bad thing for stocks to take a breather now and then.
Look at yesterday’s decline in stocks. Afterward, I received an email from a client showing me how his portfolio was up after a pretty harsh decline in the S&P 500 that day. Is he timing the market? Of course not. But with his dividend-centric portfolio, he’s still getting paid on the down days by simply staying invested.
Action Line: The amount of exposure you have to stocks is unique to your situation—that’s what I want you to focus on—your situation. I want you to understand you have control over how much or how little you’re emotionally tied to the market.
P.S. Sometimes it’s best to do as John Bogle recommended and “Don’t just do something, stand there.” As I wrote back in January:
Where should you live today? If you’ve taken an online survey, you might find yourself a perfect fit in any small town, USA. Combine this with your politics and you might find yourself living in 1776 or not far from Plymouth Rock with the pilgrims. Well that’s not gonna happen. So now what? Are you familiar with the Swiss Way? Or the Swiss Family Robinson? It’s a lifestyle.
For me? I spend time at my log cabin in Live Free or Die, NH and coastal Newport, RI. We broke ground in NH for the winter skiing, but as the saying goes out west: “Visit for the winters, stay for the summers.” There’s many a crowded July weekend in Newport when we just get in the car and head to the mountains to get away from it all. It’s a life that works for us. It’s not a political thing either.
In fact in my private life, I don’t talk much politics outside of my close-knit group of friends (I can count on one hand) and family. What’s the point? Why ruin dinner? Plus I’m too hungry to get into it, especially when I’m intermittent fasting.
Local politics? What’s the point? When Newport lost natural gas service on the coldest day of the year, the government passed the blame like a hot potato. Now, two years later, the town council wants to solve the problem by reducing demand (ie: turn down your thermostats!) and roll out electric heat (natural gas burned far away at a power plant) for a gazillion dollars. You really can’t make this up. Who wants to bang their head against this wall?
So it’s going to be survival of the fittest as the masters of the universe dream up ways to control your life. You will need to be financially fit, you will need to be of means, and be ready to create your home away from home at a moments notice. You will need to be your own Swiss Family Robinson.
Action Line: Stick with me. Don’t look for the stock market to do something for you. As the great Jack Bogle, founder of Vanguard said, “Don’t just do something, stand there.” Stand there and figure out how to create your own Swiss family life—one that’s absolutely worth living.
E.J. Smith - Your Survival Guy
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