Financial Meltdown - Media Panic
In 2016 I published a piece called Why I cancelled the Bauman Letter. Over the ensuing years, I received more responses to that post than to any other.
It's timeless, of course, since it concerns your finances and investments.
Yesterday an unknown commented
Well, yes, it seems so.
The enemy is not a virus.
The enemy is panic.
Let's talk about your investments. The US Market crashed. Hard. Bauman - and EVERYONE else (myself included) predicted this would happen. Why? Because it was inevitable. But why has the market crashed?
CNN health posted this morning:
Yet panic ensues. Grocery stores are out of toilet paper.
And the media continues to engender more panic. The market collapsed. Schools closed. Restaurants are closed to evening meals. Churches closed.
People think this is the Apocalypse.
Side note: The plague in Revelation will wipe out a THIRD of the earth's population. We're not even close to that scenario.
Media is driving this panic and some people are going to get wealthy buying stocks at rock bottom prices. That's what happens when there is a major correction.
Here's sort of how it goes:
1. Wow! Everyone is making money in the Market. I don't want to miss out! (A subtle fear response.)
2. The Market is doing great! Look at my investment grow. Maybe I'll add more. (Only buy in with what you can afford to lose.)
3. The Market just tanked! All my money was in there and I'm down tens of thousands of dollars! I need to sell so that I don't lose it all. (Again, a fear response.)
4. The Market recovers, but if you sold you don't benefit.
5. The cycle starts again.
As soon as you sell, you lose. Someone else buys your stocks - and they'll win. (Presupposing you bought good stocks in the first place.)
Truly, if you have spare cash around (something I've mentioned in my past posts) now is the time to buy.
The Market will come back. You could use this time to re-balance your investments if you have the assets.
It's a roller coaster, but not the one where you throw your hands in the air and yell "Wheee!" as you careen down the next slope.
Quit buying into the panic. Look out for yourself and your families. Help those in need, if you can.
If you have time on your hands, learn an instrument. Take some on-line classes. Write that book. Read some good books (you could read my novel set in an apocalyptic world...) Binge watch some TV.
This too shall pass.
If you read my blog much, you know I am Christian. God is still in control. The Apocalypse of the Bible is not here yet.
Read the beginning of Psalm 91, for instance.
Thanks for reading.
It's timeless, of course, since it concerns your finances and investments.
Yesterday an unknown commented
Its now March 2020 and whole world is crashing down!
Well, yes, it seems so.
The enemy is not a virus.
The enemy is panic.
Let's talk about your investments. The US Market crashed. Hard. Bauman - and EVERYONE else (myself included) predicted this would happen. Why? Because it was inevitable. But why has the market crashed?
CNN health posted this morning:
At least 112 people have died since the first US case of the coronavirus was reported in January and the virus has spread to all states, the District of Columbia and some territories.Yet we hear little of the flu deaths in the US. CNN again provides us with some statistics (admittedly a month old):
So far, the CDC has estimated (based on weekly influenza surveillance data) that at least 12,000 people have died from influenza between Oct. 1, 2019 through Feb. 1, 2020, and the number of deaths may be as high as 30,000.So twenty times as many people have died from the flu as from coronavirus.
Yet panic ensues. Grocery stores are out of toilet paper.
And the media continues to engender more panic. The market collapsed. Schools closed. Restaurants are closed to evening meals. Churches closed.
People think this is the Apocalypse.
Side note: The plague in Revelation will wipe out a THIRD of the earth's population. We're not even close to that scenario.
Media is driving this panic and some people are going to get wealthy buying stocks at rock bottom prices. That's what happens when there is a major correction.
Here's sort of how it goes:
1. Wow! Everyone is making money in the Market. I don't want to miss out! (A subtle fear response.)
2. The Market is doing great! Look at my investment grow. Maybe I'll add more. (Only buy in with what you can afford to lose.)
3. The Market just tanked! All my money was in there and I'm down tens of thousands of dollars! I need to sell so that I don't lose it all. (Again, a fear response.)
4. The Market recovers, but if you sold you don't benefit.
5. The cycle starts again.
As soon as you sell, you lose. Someone else buys your stocks - and they'll win. (Presupposing you bought good stocks in the first place.)
Truly, if you have spare cash around (something I've mentioned in my past posts) now is the time to buy.
The Market will come back. You could use this time to re-balance your investments if you have the assets.
It's a roller coaster, but not the one where you throw your hands in the air and yell "Wheee!" as you careen down the next slope.
Quit buying into the panic. Look out for yourself and your families. Help those in need, if you can.
If you have time on your hands, learn an instrument. Take some on-line classes. Write that book. Read some good books (you could read my novel set in an apocalyptic world...) Binge watch some TV.
This too shall pass.
If you read my blog much, you know I am Christian. God is still in control. The Apocalypse of the Bible is not here yet.
Read the beginning of Psalm 91, for instance.
Whoever dwells in the shelter of the Most High will rest in the shadow of the Almighty. I will say of the Lord, “He is my refuge and my fortress, my God, in whom I trust.”
Thanks for reading.
My "sediments" exactly, keep up the positive writing!
ReplyDeleteJust stumbled upon your blog because I was searching around for responses to anything Bauman related after someone lent me a link to the 2018 video shilling their wares by calling for a market collapse in 2019. The thing is a weird collection of legitimate data along with some tired and long discredited macroeconomics. I wouldn't give them a dime.
ReplyDeleteWhere the advice you are giving in this post is concerned (mostly good, IMHO) I think that it's important to also bear in mind your investment time horizon. We have divested our 83 year old mother out of all equity positions (selling into the rebound) because her investment horizon in years is in single digits and she is accumulating more money every month because her pension income exceeds her living expenses.
On the other hand, I've not touched the (well diversified) equity positions accumulated over the years on behalf of my children -- and I continue to add to those equity positions on their behalf on the same schedule that I always have, because their investment time horizon remains to be measured in multiple decades.
Where investments are concerned, the only constant is the diversification requirement; everything else is contextual, and one inescapable feature of all contexts is temporal.
Be well ...
Thank you for reading and the well-stated comment.
DeleteI agree with your assessment. Time does matter. I am told that Einstein said "“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”
Current interest rates almost dictate that young people will need to invest in something besides a standard savings account.
I miss the time, long ago, when savings accounts paid eight percent and a million dollars was still something.
God bless. Drop by any time.