[Tristan]

Been thinking about this a lot lately, especially after a client called and said he should have followed his “intution” (not facts) and sold his retirment funds for an IUL….. The general sentiment behind FIRE is VTSAX (or similar) and chill.

Sometimes I see the argument of a 60/40 split as well. Both arguments put up the historical charts that back up “if you just do this for 30+ years no matter what, you’ll live a long and happy life”.

The historical data supports this. In good times it is nearly shoved down your throats and we are all confident we are set for life….. so what about in bad times?

Because I keep seeing tons of posts on various pages about “do I sell now? When do I sell? Do I buy more now?

What do I move it too? How do I know when to get back in? What will selling/not selling/burning my money/bury my money/you name it do to my portfolio?….. this is letting emotion drive the investment philosophy, not logic.

And trust me I get it, a ton of my job is explaining why to not let emotion derail a plan….

What happens when you let emotion control things? you nearly always get in and out at the exact wrong times.

If you freaked out Friday and placed aftermarket hours that sold this morning, you’ve locked in about a 10% loss give or take.

If you miss the “best day” to get back in what happens? Well, history says if you missed the 10 best days in the market your returns would be half of what they could have been.

How does that fit in to your plan? And how do you be sure you know that you’ll get back in before that best day? Timing the market is a recipe for disaster.

Letting emotion drive your strategy is a recipe for disaster…..

So if you are letting emotion drive your decisions right now, step back and re-evaluate your situation.

How do you get out of that emotion and back to your plan? do you turn off the TV, delete the investing apps? Hire a professional? put your head in the sand?

Don’t derail your portfolio based on emotion, unless you will literally drive yourself insane if you don’t do something, and then be absolutely certain that you can live with the consequences.

[Ting]

You should stick to a long-term investment plan based on reasonable asset allocation (such as index fund investment or a reasonable mix of stocks and bonds) and avoid being disturbed by emotions.

You can stay rational when the market fluctuates by learning investment knowledge, setting asset rebalancing rules, and hiring professionals when necessary, to ensure that investment decisions serve long-term financial goals.

[Shanelle]

I buy and look the other way… I’m pretty emotional about my money but I’m staying the course…

[David]

I bought more Thursday, bought on even greater sale Friday, and bought on even greater sale today in the morning.

Eventually if we keep getting a deeper sale day after day I’ll run out of dry powder but until that point I’m buying more equities on sale whenever I can.

If you have a long time horizon this is the time to invest and maybe increase your contributions to equities.

If you don’t have a long time horizon VTSAX and chill isn’t for you regardless of whether the market is bullish or bearish.

[Sally]

Im not very smart and im kind of lazy, which can be deadly…….Worst case scenario happens, I’m diversified, so if stocks go to hell, I’ve got real estate, if stocks and real estate go to hell, I’ve got gold, if it all goes to hell, I’ve got 6months savings and I’m in better shape then most people.

Don’t panic, be diverse, adapt, improvise, overcome. And to quote JL Collins, stay the course.

[Author]

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