I’m trying to encourage my kids to save & invest while they are young. As usual, Dad’s advice turns to muck pretty much right off the bat. The markets tanked. I tell them, with great confidence & authority, that it’s just noise. To keep on saving & investing. That they’re just buying the good stuff on sale now. Listen to Dad.
There are lots of experts out there with advice on how to handle market losses. I must admit, I’m not one of them. I failed my biggest test back during the dot-com crash. I sold off all but one of my holdings then. The only one I held onto went to zero. All the stocks I sold would have made me money. Had I held onto them! What do you think I learned from that experience?
Stay out of the market, it’s just a lottery? Yeah, I did that for a while. Too long a while. But no, that’s not it … the lesson I seem to have learned is to be afraid of selling anything!
Nowadays, rather than chase what’s hot, I buy what’s not. Most of my investments are in bigger, bluer, dividend-growth companies. Or in ETFs that hold companies like that. But that doesn’t make a downward spiral any more enjoyable. Turns out big blue-chips can go down too. I have the same dilemma today: I don’t know if I should sell, hold, or buy more. Not knowing, I do what I do best … nothing! My stocks just sit there, showing red, & I do nothing. The automatic DRIP adds new shares on dividend pay days. I don’t need to do anything with that either.
I have neither the quant skills nor the psychic ability to figure out what happens next in the market. Instead, I’m trying to get more comfortable just doing nothing. It reminds me of the few times in my career where the future of my employment was at risk. When I lost my jobs back then, I had no other sources of income. But I survived. Between the individual stocks & ETFs I own today, I own little pieces of hundreds of companies. What are the chances they’ll all fire me at the same time & kill the dividends? Pretty slim, I think.
What are the chances that they’ll all go to zero? While there are no guarantees, that’s pretty unlikely too.
For a lazy & conflicted investor like me, it was almost a relief when I came round to thinking that doing nothing might be best. I still worry every time I see the market drop further. I wish I could just stop looking. I can’t. But, so far, I’m sticking with the do nothing strategy.
Only time will tell if if I can keep on doing that. And if that was the right thing to do. Especially for the sake of my kids! 😜