Today I watched several more financial stocks getting hammered with speculation about bad debt and unfavorable balance sheets. Yes, I was glued to CNBC for most of the day and watched companies like Goldman Sachs (GS) and Morgan Stanley (MS) shed 30% in market value. As I’m writing this post news agencies are reporting that talks between several banks and brokerage firms are being held late tonight to head off another government bailout. All of this feels a bit surreal and can overwhelm our ability to think rationally. How are you dealing with the financial stress of paying your monthly bills and the thought that your portfolio may lose even more value in the coming days?
Here are a few things I’m trying to remind myself to stay calm:
1. I am a long term investor. The money in my 401k and IRA are not needed for over 30 years and markets will go up and markets will go down. Lehman Brothers might fail in 2008, but another investment bank will flourish in the next 30 years. We will always need credit and investments.
2. Turn off the tv and stop listening to the chatter of the moment. I find myself watching tv and watching my blood pressure rise with every new announcement. The stock traders are probably watching the same CNBC show and feeding off the same nervous energy.
3. Take a walk. Get some fresh air and clear my head. People are still working and shopping and kids are still going to school. My two dogs need to go for a walk and don’t care that Goldman Sachs (GS) is trading below $100.
4. Don’t call my bank again and ask about FDIC insurance. I’ve done it already and received the standard FDIC insurance mailing that every bank sends out. If you want some extra reassurance you can visit a new website that Susie Orman and the FDIC put together. It’s called My FDIC Insurance and you can check your particular bank.
5. Don’t be tempted. It’s tempting to try and jump on some fire sales on companies like General Electric (GE), Bank of America (BAC), or Goldman Sachs (GS). These might be fantastic companies in 30 years, but can I handle another 10-20% decline in stock price? I shouldn’t jump in a stock for a quick trade when I would be violating rule #1 above.
I need to remind myself to follow my own advice. I’m sure the first thing I will do is check CNBC when the market opens at 6:30am Pacific Time. I probably should just take the dogs for a walk and leave the tv off for the rest of the week. What kind of emotions are you feeling with these 400-500 point declines in the stock market? Are you checking your account balances daily? Has the sense of fear and doom hit your outlook for the market? Do you take a walk and just ignore the markets?
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