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  • Writer's pictureSteve Crawley

Gaining Perspective

It is inevitable—your retirement account will eventually take a hit when a market correction/adjustment occurs.

How will you respond?

  1. Remind yourself to always trust the Provider and not the provisions.

  2. Keep market corrections/adjustments in perspective.

Read this short article from Howard Rohleder for additional insight to prepare you for what is inevitable at some point…

On Monday, October 19, 1987, stocks plunged more than 20%. I was relatively new to investing—and the crash shocked me. I realize now that, when you’re starting out, no matter how much you study, the trait you’re most lacking is perspective.

When I began investing, I approached a successful investor and asked for tips to learn about the market. Part of his advice was to watch Wall Street Week with Louis Rukeyser on PBS. That Friday in 1987, Lou started the show with a monologue explaining that the world was not coming to an end. Over the next few weeks, bolstered by his words, I added to my stock funds. Prior to 1987, I had been scared out of some of my stock funds by normal market fluctuations, not realizing that drops in price were often the best time to buy more. Over the years, I learned that dollar-cost averaging and rebalancing help take the emotion out of investing. Looking back, I see that this was all part of a normal learning curve. As a new investor, you can gain perspective by talking to trusted mentors, listening to experts and reading up on market history. But there’s no substitute for actually living through multiple up and down markets, and learning from your own successes and failures.

This highlights the value of starting to invest in early adulthood. A strategy of dollar-cost averaging into index funds may sound dull to your 20-something self. At that juncture, you might believe you can beat the market averages by picking stocks or timing the market. But as is often the case, the negative sting of lousy results will be your most valuable feedback. The good news: The earlier you get through your period of trial and error—and develop some perspective—the more time you’ll have left to achieve the success that comes with sensible, long-term investing.

Source: Humble Dollar – Howard Rohleder – October 19, 2021

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