Break Up With Your Investments
I want to start out by saying I am a complete amateur and novice when it comes to investing. This is a lesson I learned and sharing it so other people like me can read and make their own decisions, whether it’s in support of or against what I learned.
On Thursday May 14th, the market lost about 400 points at open, and I wasn’t confident the market would recover. We’re in a very interesting time because we’ve never been through anything like an economic shut down from a world health scare. We have countless people who unemployed and businesses that are closed. However, states are starting to reopen (with distancing measures) amid conflicting opinions between experts and citizens; the dichotomy of these opinions are politicized.
You have people who want to the stay at home orders to be lifted so they can go do things, and their points are numerous. They claim that the curve has been flattened and that by prolonging the stay at home orders, more businesses will permanently close and that citizens will find it harder to keep a roof over their head and purchase other essentials like food and utilities.
And the other side you have voices that are saying that we need to stay closed longer, and opening too early will only cause a second spike in cases. That the economic toll is worth the lives that are saved; since there is no vaccine we need to be cautious about going back to normal life.
I’m not here to pick sides. Just giving the views that are prevalent in these current events. Which is why there’s so much uncertainty in the stock market. Both options can equally impact the market in either direction. Which is why when the Dow Jones had a third day of losses, I decided to bail.
It’s not like the Dow Jones had a lot of positive movement the past few weeks, it was mostly lateral, slowly going up over the last 10 or so days; I was already a little pessimistic. So when these sharp losses came so suddenly I got spooked. I didn’t sell at the bottom but I definetly put the order in while the market was on the way up. I thought that it was going up only to go back down and I should cut my losses and buy in later. We can see by the photos above that didn’t happen. The Dow Jones gained almost 900 points from it’s low on Thursday. Had I stayed in, I would have had some pretty great gains for the day.
This is why we need to lose that direct attachment to our investments. Especially folks like me who don’t have the tools and knowledge to understand the market. While I just explained these times are difficult to understand and predict, it’s more so for folks in my shoes. The people with decades of experience have the knowledge to be confident in their decisions. These are people who manage my IRA, manage investments for others, and read articles from peers who manage bigger portfolios and clients. There’s a level of confidence I put into their hands; confidence that’s earned from their education, experience, and tools. That’s confidence I don’t have in myself, and yet… Here I am.
Do I regret withdrawing my money? Yes.
Did I learn a lesson? Yes.
Will I learn from it? Certainly!
Do I have a new found respect for my advisor? Definetly.
My sell order went though later in the day so I didn’t miss out on much but it still stings; that delay could have been greater — if not prevented — had a human, other than I, been between me and that money.
Today is May 15th. A Friday. The market did it’s thing again. Opened low and closed high. Not anything like the 14th but it was still a 400 point swing.
I’ll keep this investment portfolio in my hands for now, I like the experience and, all considering, I’m still up from when I first started this endeavor in March.
I’ll take this lesson as a chip on the shoulder and carry on. I’ve put the money back in the market and I’m excited to see where it takes me; I’m planning to take a vacation off the profits, with a destination still undecided. But for now I’ll sit back and relax, pretending I’m on vacation.
May 18th, 2020
The Market was up 900 points from opening and stayed there. I missed out on all of that. I could have been up a significant amount had I just been detached from this investment.
It’s funny, because had the market continued to drop on the 14th and 15th, I would have felt untouchable, that I was correct in noticing the downfall. I’ve learned that “Time in the market beats timing the market” are really great words to live by.
May 19th, 2020
My investments have reentered the market. It stings but I’ll live. Maybe I won’t be able to afford a super luxurious vacation but I’ll still be able to go on one!