Above The Line Article:
"Volatility,
friend or foe?"
By Erik Carlson
The one ingredient that
makes this current stock
market slump so unique is
the constant media coverage. One
can only take so much doom
and gloom. When people
like Oprah, who has a gazillion
women watch her, say "the
sky is falling', it
creates fear, and even panic. My
wife is an amazing hair stylist. She
came home from cutting all
these women's hair
last week, and she told me
they all were scared stiff
from the economic 'crisis',
and wanted to know my take
regarding their retirement
plans.
The key is focusing on the
big picture. With retirement
plans, that is typically
a 20+ year time horizon before
you will spend down your
monies. That's
a long time to let your money
grow. To panic and
sell now would be a mistake. We
are all human, and we make
mistakes with our money when
we are swayed by either fear
or greed.
Every bear market (down
market), within a few years,
always hits new highs. It
has always happened. It
has never not happened. I
agree with Suzie Orman, a
popular financial 'talking
head' seen on T.V., that
people with retirement accounts
who contribute on a regular
basis, with longer than 10
year time horizons should
be rejoicing in this volatile
time. They should rejoice
that they have an opportunity
to buy stock mutual funds
at amazing discounts to where
they will be when their retirement
years come.
This is a classic example
of how volatility can be
your best friend. Volatility,
in stock market terms, means
the extreme ups and downs. It
feels like a roller-coaster
ride, and if you look at
your statement too many times,
you just might hurl. The
best advice is to turn off
the news, ignore your statement,
and go live your life (while
continuing to save!).
When life hits you with
volatile times, those extreme
ups and downs, try to focus
on the big picture. If
you have just hit a 5-year
low, and you are in a 'bear
market', and feel like
you are about to hurl, remember
this: Your toughest
times will ultimately build
character and perseverance. You
may not know how, but you
will make it through. It
is in these times that God
is glorified, for when we
are weak, He is strong (2
Corinthians 12: 9,10). Some
of the biggest blessings
in life come from when we
can help others in an area
that we have had struggles.
Try and keep this perspective
and I promise you that you
will look back and say 'volatility
has become my friend'. Your
life will be blessed beyond
what you could ever ask or
imagine. |
