Last week started rough for the markets. The S&P 500 entered correction territory for the year (which means it was down 10% or more). There were a bunch of reasons for this, here are a few listed by Ben Carlson:
Russia is going to war with Ukraine
Inflation is at its highest level in 4 decades
The Fed is tightening monetary policy
Growth stocks are crashing
We’re in arguably the craziest housing market ever
Interest rates are finally starting to rise
There are labor market and supply chain shortages
The stock market is in the midst of a correction
And we’ve been in a pandemic for going on two years now
But then on Wednesday, the market went on a crazy rally and finished the week flat for the week. Does that mean we have seen the bottom for the market?
I HIGHLY DOUBT IT!
But who knows?!
This is a reminder of why trying to time the Stock Market is an act in futility. You cannot and will never win. You might have moments of brilliance but in the end, you will get destroyed.
So then the question is, “What can we do?”
The answer is, and you will absolutely hate it,
It is tempting to try and find a way to either hide or fight during these times.
Your best course of action is the one we humans hate the most.
Which is TO DO NOTHING!
We evolved with a brain that taught us, in order to survive we either fight or flight. Standing still got you DEAD! The problem is with investing you need the direct opposite of those reactions. You need to be a bit more passive, a bit more proactive, a lot less emotional, and a lot more rational.
In other words, everything we have learned to not be in our everyday life.
But there is a different way to give our natural instincts what it wants.
I have a play Stock Portfolio. The idea behind this portfolio is I can do whatever I want with the money in this portfolio. This portfolio is where I turn when attention to when the market is in a state like it is in right now. This does a few things for me
Causes me to forget about my main portfolios like my IRA, 401(k), HSA, etc.
This way I never impede the progress and growth of my wealth.
Plus, I do not make the dumb decision to stop investing large sums of money in these accounts
OR EVEN WORSE sell out completely of these accounts because the market is volatile.
I am able to play around and see what actually happens when I think I can time the market.
LEARNINGS: I SUCK AT MARKT TIME
I get to practice investing ideas before I actually put real money behind a move
I am not saying everyone should have a Play Portfolio. However, if you are someone who overreacts during these periods of uncertainty. I would really think about putting $50-$500 or 1% of your main portfolio aside to distract you from doing anything you would actually regret.
But I will let Josh Brown close out the write-up for this week because I believe we need to have a bit of perspective:
An aside but as a Black man, well let me be more specific.
As a Nigerian, I am EFFING PISSED at the way I have seen people who look like me treated a the borders in Ukraine. But also at the way people, the story has been covered in media compared to how the story is covered when African nations are in crisis.
Here are a few snippets of what has been said on NATIONALLY televised news stations:
ITV’s Lucy Watson while reporting from Kyiv:
This is not a developing, third world nation. This is Europe
Peter Dobbie on Al Jazeera, describing people trying to get on trains in masses to escape Ukraine:
French network BFM TV’s Phillippe Cobe said:
The US not to be outdone by the European counterpart always got more to say. Charlie D’Agata of CBS News said:
And as always when they get called out for what they said. Every one of them went to the old “My comments were taken out of context” BS.
AMEJA (Arad and Middle Eastern Journalists Association) said it best in response:
As much as I care about what is happening in Ukraine BECAUSE I AM A HUMAN BEING! And I also understand that Urkaine plays a major role in the production of a lot of goods and services globally. But it still annoys me the way the information is being shared.
Every time I read something like this, I end up closer to the mentality of I just hope all the Black Folks are safe. If these “civilized” (even though they have been the ones to literally wreak the most havoc in history) wanna destroy themselves. LET THEM!
But then I remember my Christian beliefs and I am like I am just as bad at times. So I guess, what I am trying to say is
Let’s Keep Showing Each Other Grace.
EVEN THOUGH, it may be TOTALLY undeserved.
Remember GENEROSITY > greed
God bless Each and Everyone of y’all
✌🏾