BAM Intelligence

No, Really: Just Ignore Day-to-Day Stock Market Fluctuations

Early Friday morning, a friend texted me. Here’s what he said:

“Will you come talk to my co-workers?! They are talking about stopping their 401(k) contributions because of what’s going on! Driving me nuts!”

Still not quite awake, I replied, “What?”

Within seconds, he replied, “Stock market fell 500 points this morning, Carl! It’s all the way down to 17,537!”

My first thought: “Wow! The Dow is over 17,000.” And this is where things got a bit exciting for me as a financial professional.

You see, about five years ago, I decided to totally ignore the stock market, especially breaking news about the stock market. I hadn’t stopped investing, but since investing is meant to be done over decades, I had this crazy idea that maybe I would really, truly act out that whole long-term thing. That meant thinking about five years, 10 years, even 20 years from now. But I most definitely wouldn’t be thinking about what happened in one week, let alone one day.

So I made sure I had a diversified portfolio of investments. And then, I proceeded to do nothing. I also ignored the stock market news entirely, which has been surprisingly easy.

But Friday morning, for really the first time in five years, it registered: The Dow had gone from just under 12,000 to over 17,000. That’s a gain of almost 50 percent over the last five years. Now that’s what I call amazing!

Less amazing, however, is what the markets will do, or not do, over the next few days. So you choose: five days or five years.

This commentary originally appeared June 27 on NYTimes.com

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© 2016, The BAM ALLIANCE

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Carl Richards

The BAM ALLIANCE

Carl Richards is the creator of the weekly Sketch Guy column in The New York Times and is a columnist for Morningstar Advisor. Carl has also been featured in The Wall Street Journal, Financial Planning, Marketplace Money, The Leonard Lopate Show, Oprah.com and Forbes.com. His simple but meaningful sketches served as the foundation for his first book, “The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money.”

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