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Work Inside – What To Do If The Stock Market Rains Losses

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What happens if you plan a day of Saturday yard work and walk outside, only to find out it’s pouring down rain! Obviously, you’ve got a couple of choices – you can throw your hands up and plop down in front of the TV for an afternoon of college football.

Or you could shift your attention to the inside of the house. Surely there are some long-put-off projects that need tending to on a rainy day. I’m betting you can keep yourself both busy and productive…and dry…working on inside projects for as long as it rains.

Like nearly every year, we’ve recently experienced a few pretty choppy days in the stock market. What’s going on here? China this, global slowdown that, will the Fed lower interest rates.

No one can say for sure which direction this market is headed next, but sooner or later, it’s going to rain bad news.

So, what do you do if you want to be a financially responsible person, provide for your future and the outside world just seems not to be cooperating? Here are a few thoughts for you:

1. Give up on fairy tales. Have you ever seen one of those dieting ads that says, “Eat what you want and lose weight!” They are all over the place. And the ads work (even if the all-you-can-eat diets don’t) because human beings always want to believe that they can somehow gain the rewards of effort for no effort. Something for nothing.

So, at different times in most market cycles, someone is going to say to me, “I’m just going to keep my money in cash until a better time.” I heard that in 2008 and 2009.

Since 2009, the market has returned over 10% per year – but only for those few brave souls willing to dive in when every talking head of TV was screaming “global financial melt-down!”

Do you want the rewards that only the financial markets can deliver? Then you’ve got to be in those markets as a participant, being willing to get wet when it rains, not on the sidelines, hoping for a better day.

2. Get perspective. We want what the markets give (attractive returns over time), we just don’t like the package it comes in.

I often counsel clients to expect the following over 10 years of investing in the stock market: expect 3 really good years, 2 really bad years and 5 just kinda ho-hum years. This advice isn’t based on a scientific back-testing of every possible market movement over the past 70 years. It’s simply a healthy expectation to have, knowing there will be many years of market participation when you’ll say to yourself, “This isn’t much fun!”

Stock market gains tend to come in clumps – miss a few days and you might miss much of the forward advance you were hoping to get in the market.

I don’t know if we have sunshine or rainy days ahead…if we are headed into a minor correction or a major bear market…or neither! I do know I have been through two earth shaking bear markets, and I can tell you – only the patient survive.

If the rain comes soon, is there some inside work you need to do?

Byron is a Certified Financial Planner and Managing Director of the Planning Group at Argent Advisors, Inc.
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