Distractions are everywhere. It's 24/7, especially since the invention of the smartphone and its evil counterpart – social media.
Distractions are relentless and overbearing. They don't quit, and they never falter.
The mainstream media will ensure that you don’t forget what those distractions are. Their adjectives seem endless when a hiccup happens in the markets: collapses, malaise, titanic drops, meltdowns, crashes, downfalls, weakness, slammed, crushed, catastrophe, debacle, failure, and beaten down.
Other common terms are permanent loss, worst since (insert year here), and “money moves to make now." these terms are designed for the same purpose: To keep your eyes glued to make advertisers happy and keep the money rolling in. The product is you, and they are more than happy to peddle you to the highest bidding advertiser.
The last few weeks have been a perfect example of that.
They’ve been pushing hard these last few weeks, if for no other reason than to remind you that despite all the positives that the equity markets have brought to investors this year, they can easily be scared out of their investments, thus blowing up their financial plan. We are all painfully aware of how the media can frame stories and headlines that dramatically impact investors' thoughts and feelings about the markets.
There are many reasons for them pushing the fear narrative -maybe it was because the Fed more or less decided to punt on cutting interest rates, maybe because of Japanese investors getting pinched, perhaps the latest jobs report, or because of renewed fears of recession.
Who knows why?
It doesn't matter what the reasons are because #1 - these are all short-term problems, and #2 – of course, the markets will sell off in reaction to news like that; what else did you expect? Is it for the market to climb with news like that?
What I worry about is how quickly investors will forget their timeframes.
What if, in the face of everything negative about the short-term outlook for markets and the economy, investors REMEMBERED that their time frames were long-term? (greater than 10-years).
Most investors probably don't realize they already have a long-term horizon. Even our clients who are already retired, drawing income from their investments, want their money to last more than ten years. Suppose you follow a carefully crafted financial plan to reach your goals. In that case, I can almost guarantee your timeframe is at least ten years (in some cases, it can span many decades).
If investors just REMEMBERED that they have a long-term horizon of at least ten years (and even longer), how would these short-term distractions be seen?
Probably as a simple bump in the road.
Would there still be selloffs? Probably. Would bear markets even be a thing? Maybe.
I suspect that people whose only goal is to speculate and gamble with their investments would be the only ones feeling the sting of shorttermaphobia (look at me being creative and making up new words, and to think, my 8th-grade art teacher said I wasn't artistic!)
This little diatribe is more about you than the markets. It has nothing to do with the markets or the economy (especially in the short-term). However, it does have EVERYTHING to do with how you respond to market movements, headlines, and worthless predictions.
Your financial goals will not be achieved in the next ten days, ten months, or ten years. I think you’ll find that your financial plan is set up for decades of success, not just days of success.
Stay the course, my friends.