Treavor Dodsworth CFP®, CPA, CKA®
#98 - Market Movement
Every year, I do biannual reviews with clients. I have just about finished up with this first cycle of financial reviews. There was one thing I had on the agenda to discuss with just about every client. Markets have had a good run but won’t go up forever. After the pandemic crash, much of the stock market has shot up. VTI - Vanguard Total Stock Market is an ETF that tracks much of the US stock market. It is trading at or near record highs. In December 2019 (another time markets were at or near record highs), I wrote a Sycomore Saturday about mentally/emotionally preparing for a market drawdown. I don’t believe in timing the market but I do believe we can mentally prepare ourselves for market movement without clouding our investment decisions. The goal is that we do not allow emotions (namely greed and fear) to be the only driving factor behind our investment decisions.
Below are the thoughts I posted in December 2019 and I still believe they hold true today.
Money is not the goal or objective but merely a tool to reach goals.
Remember to maintain a long term investment perspective.
Recognize that market movement is normal.
Practice separating emotions from investment decision making so that we do not let greed drive our buying or fear drive our selling.
Interesting Article(s) or Video(s)
A Wealth of Common Sense - How Long Does it Take For the Stock Market to Double Off a Bear Market Bottom?
Ben takes a look at historical bear markets for the S&P 500 and how long it took them to recover. The speed of the jump in the stock market after the recent pandemic crash is not the norm. We cannot assume crashes will always recover quickly.
Thank you for reading!