Keeping The Choppy Markets In Perspective
Uncertainty actually is the friend of the buyer of long-term values.
— Warren Buffett
Market headlines these days have turned quickly from positive to negative. From “the Dow tumbling 700 points in October” to the “US facing recession due to debt limit” to “Oil price spikes”, it appears that we have hit a somber period in market news. Even well-known bears like Jim Rogers and Robert Kiyosaki have come out of the woodwork to proffer their doomsday predictions. With the ongoing uncertainty from the delta variant still overshadowing us, it is easy to get slightly worried about our investments.
When it comes to investing, the biggest elephant in the room is the word — “uncertainty.” No one can say for certain what the markets will do, and there’s no crystal ball that’ll show you the outcome of any situation. However, that is why you receive a return on your money from investing - if the path was clear with little risk, then you should expect a rate closer to a savings deposit. The following points can help you keep things in perspective during this “uncertain” period.
What Kind Of Information Are You Receiving And Acting On?
Most information today, even those from what we consider to be a “trusted source,” is shared with some kind of intention. Most of the time, that intention is to elicit an emotional response - as in the case for most social media and news headlines these days. It is nearly impossible to remain objective and unbiased with what you may read.
Think about the spheres of influence within your life. Beyond family, friends, and co-workers, your other information sources are likely to be from social media. Everyone’s inner circle may be different, but even your friends’ spiciest takes can be less chaotic than the headline articles you see lining your feed. Now, how do you then decide what’s worth listening to and what’s worth acting on? Ask yourself:
Is this information meant to update me or to make me panic?
Is this information meant to make me spread and share it to more people thanks to its sensationalist headline?
Does the “guru” quoted in the information have any clue who I am or is even concerned with my own money?
Does this information change my outlook on what’s happening in the markets?
Investing With A Purpose
We at GYC strongly believe that goals-based planning and investing is a key determinant to your portfolio construction. Whenever you are uncertain, remember your overall game plan. What is your goal? It is likely that you are investing for a grander purpose - like stopping work at 50 years old with $2M in the bank, or gifting $100,000 a year to your favourite charity. Your goal should never be something like “getting a 15% return each year.” Sure, there might be years in which you accomplish that, but there will also be years where that won’t happen. That kind of thinking is bound to disappoint, and when your expectations aren’t met, it is very likely that you will seek change by tinkering with your investments.
Once you invest with purpose, with an end goal in mind, it is hard to fall into this trap. You will find out that there’s no need to obsess over rates of return at the end of each year, and there’s no need keep chasing after more. All you will care about is your progress towards your purpose.
Most Importantly…
As we are all human, we are bound to experience a lapse of focus on our goals or a fixation on unexpected losses beyond our control. It is futile trying to control uncertainty, as you may inevitably either end up putting yourself at a higher risk, or being unable to achieve your life goals. Having losses is an inextricable part of investing, just as uncertainty is an inescapable part of life. Yet, you can choose not to be ruled by it, and you certainly do not need to be afraid of it.
Why not try seeking a new perspective? Feel free to drop us a line below for a no-obligation honest discussion. Talking with someone who has your best interests at heart can help reframe what’s happening in the economy and why it should matter to you.
