Stock Market Insanity

(Contributed by Rose Hillbrand, Bank On Yourself User, Eagle Financial Solutions Employee)

We’ve all heard the saying, “The definition of insanity is doing the same thing over and over and expecting different results.”

This quote came to my mind recently, as I was involved in a discussion on Facebook during last week’s stock market roller coaster ride. A friend had posted that her IRA couldn’t go any lower, so “now is the time to buy!” Understandably, I was not in agreement with this sentiment, which sparked a whole discussion with one of her other friends who had trained at some point to be a financial advisor of some kind.

His argument was that “the market always comes back”, and that “the average investor has received a 10% return over every 20 year period in history.”  Of course I took exception to this, and shared some Dalbar stats of ACTUAL investor returns  (not just stock market “returns” – which of course are just numbers on paper – the actual RETURN only happens when the investor sells, which almost inevitably is at the wrong time – it’s just human nature) – nowhere even remotely in the vicinity of 10%, by the way.

His response was polite, but doubting of “my numbers.”

This is frustrating to me. One would think that, in the face of such recent volatility, people would be looking for a safer place for their money. But instead, I have heard a number of people express the same sentiments as my Facebook friends – buy more, now!

If history has shown us anything, it is that while yes, the stock market does usually come back up, it ALSO goes back down – on a rather unpredictable basis, I might add. The amount of time it takes to come back up can also vary – sometimes it takes several decades! If the market tanks when you are 60 years old (or even 50), are you prepared to wait several decades for retirement??

How many times do people have to lose their shirts in the market before they stop counting on it to “come back up”, and provide for them in their retirement years? How many times do you need to whack your head on a brick wall before you realize it will always hurt? How many times will investors do the same thing over and over, and expect different results?

The bright side is, while seeing others go through this so many times truly frustrates me, at least I don’t have to worry about it personally. My “retirement plan” only goes one direction: UP. And that’s the only direction it ever will go (until I start taking money out of it).  I know it will be there when I need it, and I know how much I can expect to be there at any given time.

If you want to find out how to set up a plan like mine, click the button above to request a free confidential analysis with a qualified advisor, who can show you what your options are, and what such a plan would look like for your specific situation.

Stop the insanity! Request your analysis today, and get off the roller coaster for good.

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