The Stock Market and Other Spooky 2022 Trends
If 2022 were a movie, a picture of the stock market would definitely be on the poster. You know, that red line graph with aggressive undulations and a steep arrow down.
It's supposed to scare you into thinking the world is ending, there is no end in sight! I thought they might add a picture of the economy on fragile ground, but how would you depict the economy in a picture?
"It's the Economy, stupid."
People get naturally spooked by the reality that the economy isn't always in growth mode. The last 10 years have been pretty good for us in the USA. Home equity, job gains, lower tax rates, robust business growth, and consumer confidence have bolstered prosperity for many Americans.
All you have to do, as we say in personal finance, is prepare. Yep, that's it.
Concerned about a job loss? Work on paying off debt, bolstering your emergency fund, and activating your professional network.
Concerned about losing the equity in your home? Why? Unless you bought recently and we turn into a housing crash, equity has been on an uptrend for years! Secretly I hope prices do fall, because real talk, the prices are laughable.
Concerned about your IRAs or 401k losing value? Well, I'd thought you'd never ask.
Let's start an Investing Club!
Stock market news is nothing new it's been one of the most powerful attention-grabbing headlines in history. Almost every newspaper has some mention of the stock market on the front page, and even morning news shows bring up corrections in their show, right after talking about a new cookbook (perfect transition, right).
It's as if to teach us if you aren't thinking about the stock market today and every day, you're doing it wrong. You could have seen that stock market crash coming, what were you thinking? Yeah, not so fast. And don't even get me started on those YouTube "gurus" with dramatic thumbnails fishing for views.
Most younger people, that I know at least, don't really care to follow the stock market, and rightfully so. They are focusing on grades, homework, final exams, soccer tryouts, and if they are going to get into the fraternity/sorority.
In fact, I don't know why people worry about the stock market so intently even if they are investing in it.
"Oh I'm using this account to buy a Tesla next year"
Only the people who may need to use their investments in the near future, such as retiring in 2 years, or cashing out of the market to buy a condo, should pay closer attention to market cycles.
For the rest of the investors, who have long-term time horizons, why let fears of the stock market crashing faze you? Why even let the thought of if the stock market will recover cross your mind?
As has been uttered by every finance person out there, the market will go up and go down, but over time it always recovers and then some.
Just take a look at historical charts. If you think we are in the stock market crash of 2022, you're still sitting on gains from 5 years ago.
Think about it. If the market always went up, why would people even bother saving money in a bank account?
The best thing to look at is anything but your Gain/Loss report
Whether it's a bear market or a bull market, checking your stocks every day will just add to your agony and anxiety. Do you watch your plants grow too?
Now don't get me wrong, if you want to have some fun money to trade companies of interest to you, by all means, have at it. But know your exit strategy.
Create an investment strategy that is sound and depends on the rationale, not emotion or market timing.
And I'm not dismissing the fact that you should rebalance regularly, to make sure the investments still align with your goals, not rebalance because you were watching CNBC and started sweating.
Don't let the market or economy spook you this Halloween. No one can predict the future, but we can prepare ourselves and take comfort in knowing we have a lot to be grateful for (Just wait for my Thanksgiving post next month).