What’s happening people!
We live in such exciting times don’t you think?
I mean, did you notice what happened in the last couple of days in the global stock market?
Hell yeah, risk-on, risk-off baby.
Why are you so excited TheFrugalSamurai?
Because volatility creates excitement! It creates headlines and articles and EYEBALLS PEOPLE.
No more slow news day, Huzzah!
We live in the information age – so no sooner did the gargantuan point drops in the DJIA and S&P 500 transpire than all sorts of reasons were spouted:
But you know, my own Hollywood movie titles aside, I think that maybe the stock market dropped because that’s just what it does sometimes – it goes down just as it goes up.
Have people forgotten that?
Does there always have to be a reason why the whole market moves up or down?
Maybe, maybe not – I haven’t quite figured that part out yet, spose that’s why I’m not managing billions and billions of dollars of other people’s money.
Then again, I’m an avid reader of the titans of wealth management and I’ve gone and dug up some of my favourite quotes from them and how I’ve applied to this current uncertain time, more as a reminder to myself than anyone else:
“People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.” Peter Lynch.
Pistol Pete knows.
All jokes aside, it’s very true what he says – after all, if you can’t accept the fact that it gets hot in the kitchen, you shouldn’t be in there. Period.
“With all this consumer debt, business debt, government debt, smaller movements in interest rates have a magnified effect. a small movement can tip the boat.” Bill Gross.
The media is full of hyperbole and sensationalism and attention-grabbing headlines, but there is some fact in what they report. The latest market uncertainty does have a lot to do with predicted interest rate rises in the US – the flow on effects globally will be enormous.
A rise in interest rates makes it more expensive to borrow money, the more expensive it is, the less willing companies and individuals are inclined to borrow, the less inclined they are to borrow, the less inclined they are to spend and make purchases, less spending means less revenue – less revenue, less growth.
“Having the basics—a good bed to sleep in, good relationships, good food, and good sex—is most important, and those things don’t get much better when you have a lot of money or much worse when you have less. And the people one meets at the top aren’t necessarily more special than those one meets at the bottom or in between.” Ray Dalio.
Rayray is one of the most insightful and philosophical investors out there in my opinion, trust him to keep things in perspective.
End of the day, money is money and people are people.
I’d rather have bad money and good people than good money but bad people.
Of course, having good money and good people is the best!
“What are the secret of success? -one word answer: rational”. Charlie Munger.
I have money in the stock market – most of us do through our shares, superannuation (an Australian pseudo-401K my American friends), managed funds etc. Tell me you didn’t feel a little bit irrational when you lose money?
Heck, I get peeved when I turn the corner and see a cheaper priced Vietnamese Pork Roll – imagine losing thousands, tens sometimes hundreds of thousands in a matter of hours?
But that’s just it right? Emotions rarely create success, more often than not – it’s rational thought, processes and execution that does.
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” Warren Buffet.
So many great quotes from the great man – but this one is particularly true when I was assessing the situation in the last couple of days.
The majority of my holdings I purchased in the belief that I would hold for a very long time.
Yet, the market movements in the last 48 hours or so has given me a good excuse to stop procrastinating and run the rule over my portfolio.
The result? I exited half my positions because the fundamentals and financials weren’t there anymore, they weren’t there for some time now.
This was reflected in a slow steady decline in their corresponding stock prices.
Luckily, I got out at a profit – not as much as I could have if I had monitored it more closer.
That’s investing right?
What do you think? Did you enjoy this post? Please help me out if you enjoyed this and click on the little “follow” button at the bottom right and be a follower. This way, you’ll never miss my words of awesomeness!
P.S. As always, the posts are opinions and thoughts of yours truly only – get out there and do your own research!
P.S.S. Really want to continue the real estate series but keep on getting distracted “sigh”.