Acknowledging Our Feelings About Stock Market Wobbles

I read far too many parenting books, and now I know it is important to acknowledge our feelings. That doesn’t mean we can respond however we want, be we should be conscious and identify the feelings when they arrive. Adults could extend this the stock market as well. We may try not to look, but it’s hard to completely ignore everything all the time. Even though stock market rises over time, it can still be frustrating to make a purchase, only to have the prices go down the very next day. Check out this chart from Cullen Roche of Discipline Funds:

This idea of constant and repeated regret reminded me of this chart outlining the investments of Isaac Newton in the famous bubble of the South Sea Company in the 1700s.

I can’t guarantee the accuracy of this chart as it was hard to follow the source trail, but anyone who has lived through a bubble can understand how this occurred, even to a genius like Newton. It must have drove him crazy. It may also explain why Newton is credited with the quote “I can calculate the movement of the stars, but not the madness of men”.

These days, there is also a constant flow of articles predicting future wobbles or confidently explaining past wobbles. Yet, there are very, very few people who can say that their financial freedom was achieved by taking action in response to any of these market wobbles. At the same time, there are tons of people who have found their greatest feat was investing early and then leaving it alone for a long time (many times this works out via a steady mortgage payment).

I know that I’m personally much better at ignoring the wobbles now because I’m older and have seen firsthand the benefits of leaving stuff alone. Whenever I start worrying about how high valuations have gotten, I remind myself that so much of my wealth has been the result of sitting on my hands and letting these feelings pass.