Making sense of world and stock market turmoil


With all the turmoil in Libya today and the daily roller coaster of the stock market, it’s easy to feel like things are moving at a breakneck pace and really getting away from us.

Libya has been in a civil war that never seemed to go anywhere for months…and then bam! Suddenly, the rebels marched into Tripoli today and stormed Gadhafi’s compound. But it begs the question: In the immediate aftermath, what kind of government will take charge and will it further destabilize the world?

Then you have the stock market with huge swings in value from day to day. What do you do when you save money for the future, and you see the value of your retirement account whip up and down?

In preparation to talk about this topic today, I violated a key rule of mine: I normally don’t look at my investment accounts any more than 12 times a year when I get my monthly statements. But I checked today.

Like anybody else, I saw the losses and really felt them in my stomach. (That’s a funny thing about the human psyche: Losses loom larger in our mind than gains.) At first it was like, “What am I doing?” Then I remembered: I have a long-term plan and I can’t let the short-term upset me.

(As far as why the swings in the market are so wild, it’s all the computerized trading using technology to executive massive trades in a fraction of a second.)

Consider this: If you look through history, today is a much better time to be invested than 10 or 12 years ago. I know that sounds crazy compared to the 1990s. So let me explain.

We’re a much larger economy today. The value of companies is completely different today than it once was. As an example, the NASDAQ was over 5,000 at the peak of the tech bubble. Now it’s worth substantially less than half what it was 11 years ago. Likewise, the S&P 500 is at 11,000 today, though it was over 15,000 back in 2000.

My point is when we thought stocks were the greatest thing to be in it, the market was poised to go a through a “lost decade.”

Today, people are scared of stocks. That makes this the best time to be in the game with a well-diversified portfolio to which you contribute every pay period in little dribs and drabs.


Have I changed what I’m doing with my investments? I have not. It’s still full-steam ahead for me at my turtle investor’s pace.

When everybody else is running one direction, ask yourself if you should zig when others zag. People as a general rule being scared of stocks says to me this is a great time to have a strategy and stay on target with your investing.

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