The landscape tilted towards lower stock prices during the last five days as the market took a beating. Both the Russell 2000 and the XBI hit new 52 week lows and there doesn’t appear to be an end in sight.
What’s going on these days? It feels like the world is on fire. But man, I am really trying to. At least when I have my “investing” cap on. Anger and frustration and finger-pointing and blame can feel cathartic, but they sure won’t help our savings compound into wealth. For that, we have to put our politics and any anger we feel aside, as much as we can — you can use your money and time and energy to express your political or moral views or other opinions, and that’s certainly a healthy part of democracy, within limits, but try not to be driven by those political views or opinions or angry reactions to world events when you’re making decisions about how to manage your money. That makes you far too likely to make rash decisions at emotional highs and lows, and that’s one of the surest ways to wreck a portfolio.
Definitely what’s happening in the world is horrific. However we are lucky that we can discuss, what it means for our money, rather than for our lives or our kids. Lets look at how stocks performed around past major conflicts.
US stocks typically dip at the outbreak of a war… then recover quickly. One year after the onset of the war, they gain 11%, on average. The S&P 500 didn’t even drop this time around, which tells me stocks want to move higher.
As investors, we shouldn’t fear war. Stick to the game plan: Buy great businesses with strong balance sheets.
Busy And Useful 