The Rollercoaster Ride

Amar Pandit , CFA , CFP

Last week I wrote about the 3 different types of media scares. I had also written earlier how easy it is to get people out of their equity investments. All you need is a gloom doom guru or an intellectual person who seems to know everything including the future rattling out intelligent arguments (as I mentioned earlier, this believable bullshit is the most difficult one to ignore).

Now, let me ask you a question that I have asked previously.   

Will you jump out of a rollercoaster ride when you feel uncomfortable? You know it is going to go up and down, so you fasten your seat belt, sit tight and maybe like me close your eyes. The brave ones will look out and enjoy the speed and thrill of the ride.

Well, the stock market will be one such ride in the short term whether you like it or not. The stock market will go up and down. Period. You know that. You have invested for 2030, 2040 or some even beyond that.

Why do you then want to jump out when the stock market behaves like a rollercoaster in the short term when it is doing things it is supposed to do?

Some people scream “The rollercoaster is going down faster. We have jumped out.”

Will you jump?

Think about this behaviour.

Do not let temporary market declines get you to jump out of your long- term portfolio. As Warren Buffett said, “The stock market is there to serve you and not to instruct you”.