We are all sometimes guilty of making false assumptions. One of mine has been that people know better than to use a credit card to buy an investment. Yes, I can understand the need to leverage a credit card in the short-term to help fund education or business equipment in a pinch. But buying stocks or something like bitcoin with your credit card? It turns out this has been more common than I thought.
Investing is counterintuitive. You try to buy when prices are low, which makes good intuitive sense. But then you're supposed to hold while others are selling, which doesn't feel very good. You're also supposed to ignore, or at least not fall prey to, hyperbolic news headlines when prices are down. This can be hard too, especially when headlines start getting interesting. And yesterday, when the Dow was briefly down 1,600 points and the media nearly went berserk, it's just plain hard.
By now you've likely heard about the shutdown that wasn't, or at least that wasn't a lengthy ordeal. When last Friday ended without a spending deal in Congress, everyone knew the government was going into partial shutdown mode. This would mean federal workers being furloughed, national parks closing, and even much of the IRS being shuttered for who knew how long. While this kind of thing should be a rare and surprising occurrence, personally I wasn't shocked so much as embarrassed. I try to not "get political" in these posts, but it's hard watching so many smart people in Washington D.C. acting so dumb.
Last Thursday the S&P 500, a typical benchmark for the US stock market, hit a technical correction by falling at least 10% from a prior high. In just less than two weeks the index seemingly went from happy and content to sad and disillusioned, leaving long-term investors' heads spinning.
Stocks recovered somewhat on Friday and through yesterday, but we're likely not out of the woods yet as bouts of volatility typically take at least a few weeks to burn off.
A common question lately has to do with the market runup and what to do about it. Since there's no indication of an imminent economic slowdown, the stock market could have the wind in its sails for a while yet. But as you're all aware, this can change on a dime. And since long-term successful investing has more to do with how we react to losses than gains, reminding ourselves of potential downside risk is important.
Strange as it may seem, there's a fair amount of folks out there who are planning to not retire. Yes, unfortunately for many this is a non-decision caused by the affordability issue. For others the decision to keep on working is driven by a variety of factors. But planning to not retire doesn't give one a pass on retirement planning. It's still just as important, even though the timeline might be different.
