The market has felt extra volatile lately right? I know my own portfolio has. One day it’s up 2%-5%, the next day it seems to fall right back down. I’ve watched my portfolio drop 30% in a matter of two weeks. It has since recovered most of that loss, but it’s admittedly tough to stomach.
It seems like the sentiment has abruptly changed and the tone about the market is now negative. Probably the worst time to invest right?
I don’t think so. I think if we have our basics covered, times like these are the best times to be buying stocks.
For my military job, we do a ton of training and have a lot of cool, high-tech gear. But guess what. If we don’t cover our basics and take care of the simple things like keeping our feet dry, staying hydrated, eating enough, etc, then none of that fancy stuff matters.
We will fail.
I think investing is the same way.
So here’s what I’m changing in the face of this crazy volatility.
Nothing.
I’m sticking to the basics:
- I don’t have any money I may need in the next 3-5 years invested.
- I’m adding money to my investment accounts monthly.
- I’m looking for the absolute best businesses I can find and becoming a part owner of them (with the intent of holding forever).
I’m not perfect (not even close) and I’m still learning. At times, I’ve given in and tried to get too smart, or trade around earnings, or whatever, and it bites me every time.
Some Perspective on the markets: This year really isn’t all that crazy.
Here’s a Tweet from Michael Batnick from Ritholtz Wealth Management:
The percent of days with 1% moves (NASDAQ-100).
2017: 10%
2018: 36%
2017 was the outlier.
The median for all calendar years from 1986-2017 is 36%.
Since 1986, with all that volatility over the years, the S&P500 is up 1,150%. Not a bad 31-year bull market (with the .com bubble, and one of the worst recessions of all time muddying things up to boot).
So what does all this mean for us?
Let’s just keep our feet dry. Make sure our basics are covered and just simply invest according to the cadence that works best for us.
Austin