I periodically recycle old posts on my blog to ensure that new clients can benefit from valuable content they may have missed and this post is one such example. It is early morning on Sunday and I’m thinking about the economy and the markets. I know I should not be.
Well, an addiction this poor soul cannot seem to shake. Scary October is almost over. No more pumpkins, masks, spiders and witches. I’m kidding. It has nothing to do with Halloween. Some investors may also be nervous during October.
According to Investopedia, the dates of some large historical market crashes occurred during this month. Black Monday, Tuesday and Thursday all occurred in October 1929, after which came the Great Depression. The great crash of 1987 occurred on October 19, and saw the Dow plummet -22.6% in a single day. Yikes!
Investing is much like discussing money issues with your spouse. It can be difficult sometimes. As I have told people for years, if you are waiting for all the uncertainty to go away you are never going to invest in anything again. So, volatility or uncertainty is just something we all have to learn to navigate.
In my work, I always attempt to seek out articles and reports that challenge my current thinking. I do not read articles that are written to scare us witless and sell advertising. Some feature conspiracy theories. It is entertainment and confirmation bias.
I do not work alone to keep my investors informed. I am connected to a variety of industries, analysts and partners. With hundreds of years of collective experience in the industry, we communicate regularly.
There are many things that could go wrong even in a bull market. Some people expect things to go up everyday. Fear is sometimes very helpful. If fear is not an emotion that people possessed, people would be even more prone to doing silly things than they already are. However, irrational fear is not healthy at all.
If you want your money to sit and do nothing safely then there is always the bank or fixed deposit. People who fear change will lose out to optimistic explorers. I do not compare my portfolio performance against the fixed deposit over a cycle.
To put things less inflammatorily, beware of those who pooh-pooh alternative investments like hedge funds all the time. Take it seriously at your own risk. It is a matter of education.
The year is ending soon according to some people and it is always easier to look back after the fact. You should not worry too much about next year as nobody can read the future accurately. I suggest you get a pair of earmuffs because next year will be filled with noise like in the prior years.