By Craig Erwin, Ph.D.
The financial headlines are horrific. The NASDAQ stock exchange fell 5% yesterday, the most in one day since June 2020. Every expert seems to be predicting that things will get worse, with no end in sight. It’s hard to find any good news.
When everyone seems to have lost hope, we may have reached maximum pessimism. That’s when everything seems so bad that it can’t get any worse. Fortunately, when everyone is in the depths of despair, better times may be ahead.
In times like these, with the stock market alternately cratering and bouncing, you are likely to read headlines that tell you how terrible things are, predict what will happen next, and prescribe what you should do about it. But no one can predict for sure what’s going to happen, and few can be trusted to offer sound advice. Journalists seek eyeballs, so it helps if they sensationalize. And every day they may prescribe something different. If you follow their advice, you’ll get whiplash.
So, what must you do if the news is full of predictions for a stock market crash or recovery? Nothing. On any given day a handful of “experts” is likely to predict a crash or recovery. But they can’t know if it will come tomorrow or the next day or a month or a year from now. So, what should you do? Nothing.
Although you don’t need to do anything else once you start saving and investing, if you can afford it, increase the amount you save per paycheck, especially when you’re really afraid. That takes guts, but it makes great sense because you buy stocks on sale since their prices have been beaten down. And the more terrified you are, the better the sale. That will pay off when the market rebounds and the stocks you bought on sale soar.
Of course, you should never invest money in the stock market that you will need soon. You should not have money that you need for tuition payments or a down payment on a home in the stock market. The stock market is suitable for long term goals, like saving for retirement (as long as retirement is years away).So, ignore the stock market and financial news. It’s the smartest thing you can do.
Are you terrified by the current state of the stock market? Do you have difficulty not taking action? Do you have any techniques you use to help you relax? Do you spend much time worrying about your investment portfolio?
For more information on the stock market, the economy, and investing, click on the following links:
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