Does this volatile stock market scare you?

2018 wasn’t a great year for the US stock market.  The international market didn’t look pretty either.  It rallied at the beginning of the year, and then became unimpressive during the summer.  At the end of the 3rd quarter, it peaked briefly.  After that, it went down, and down, and down …

It is so depressing, isn’t it?

If you have lost money, you are not alone.  Who haven’t?

Though I have not checked my investment for over 3 months, I know for sure it went down.  A big portion of my investment is following the S&P 500 index.

Am I happy about this stock market?  No.

Am I in panic mode?  No, I’m not worried much about the market either.   Sooner or later, the market is going to bounce back.  The question is not if, it is just when.

Disclosure:  this blog is for entertainment only.  It’s NOT financial advice.  I would do something does NOT mean you should do it.  Everyone’s situation is different.

What am I doing about my current investment?

I’m doing nothing.

A couple of weeks ago, a friend of mine was so scared by this stock market.  As a result, she moved all her 401K investment to the fixed income.  Her plan is that, after several months, if the market gets stabilized, she will move the money back.  I fully understand her concern, but won’t follow her steps.

I’ll stay put for all my current investment.  Why?  It’s impossible to predict the market.  Riding with the market is much easier than timing it.  I’m a lazy person, and don’t want to spend too much time worrying about it.  I want to use the time to enjoy my life.

For my friend’s situation, yeah, she might feel safer now.  But, when will be the good time for her to put the money back?  Who knows?  It’s an agonizing call.  There is a chance she might miss the rally.

This is my doing-nothing strategy:  let it down, and let it up, whatever.  I won’t need that money for years.

10 years down the road, I’ll be one of those winners.  At that time, not many people will remember much about today’s market volatility.  It’s just part of the history.

Do you remember much about the financial crisis in 2007-2008?  What about the dot com crash in 2000?

What would I do if I were still working?

Of course, this is just an assumption.  I’m not working right now.

If I had a steady paycheck, I would continue maxing out my 401K, and investing it the same way as I did before.  No exceptions.

If I had more disposable income, and wouldn’t need it in the next 5 years, you know what I would do?  I would invest them into the no-fee and low-cost index mutual funds monthly, as usual.

During the 2007-2008 financial crisis, I made one big mistake.  But I learnt from it, and became older and wiser (I hope).

I know it doesn’t look pretty:  if $1000 was invested a month ago, now it’s probably only worth $900.  But, remember, this is only short term.  10-20 years later, I’m sure this $1000 investment would look great.

The key is the dollar cost averaging.  Invest consistently if I could, no matter how crazy the market is.

What am I thinking now?

This is one of the few times I wish I were still working.  Why?  I would be able to keep investing.  Call me greedy if you want to.

I’m thinking about getting a job once back to US, probably a part-time job.  I don’t need a job to give me a life purpose, structure, or a chance for socialization.  I’m very happy about my retirement life.  My only motivator about going back to work is $.

Financially I’m doing all right, even if I keep being retired.  But it’s so tempting to be able to invest more, especially at this down time.  I really don’t want to miss this great opportunity.

Obviously it would be very tough for me to get adjusted to the work life.  It has been almost 4 years since I retired.  Giving up the gained freedom is not easy.  Waking up by the alarm clock is hard.  Following others’ orders touches my nerves.  The packed lunch from the leftover of the previous dinner is not that tasty.  And driving during the rush hours is not fun.

We’ll see how much power the money has over me.  I’ll keep you posted about my next step.

Summary:

My point today is: don’t panic when you see the market going down.  Have a rational strategy for yourself, and enjoy the bumpy ride if you could.  Happy investing!

Dear readers, how do you feel about the current market?  What did you do about it?  What do you plan to do?  Please share your thoughts and actions with us.

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4 Responses

  1. Helen, After letting my cash dividends mostly accumulate over the past year, I have started to be more aggressive reinvesting some of them at now lower prices. I feel like the market downturn has been pretty orderly and expected to this point. Tom

    • Retire Early Helen says:

      Hi Tom, that’s great you are reinvesting some of the cash dividends. Yeah, the bull market had been here for a long time, and the bear market scares people. On the other hand, it provides a good opportunity to invest. The benefit will show up down the road.

  2. GYM says:

    What your friend did (cash out and put in fixed income) is very common and I think an automatic response from a lot of people who are scared. Your strategy of dollar cost averaging is also one that I follow. I also wish I had more money to invest too.
    I think working part time is nice, works the brain and adds some more ‘fun money’. Not needed money but ‘nice to have’ money.

    • Retire Early Helen says:

      Hi GYM, yeah, my friend was so scared of the market. Taking them out of the market gave her some peace. I guess everyone’s risk tolerance level is different. I’m still struggling if I should apply for some part-time jobs once back to US. Having some extra income would be nice. The hard part is get started. Once I start working part-time, it may not be that bad as I thought.

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