It’s not always easy to put things into perspective. Sometimes we get caught up in the hoopla and simply forget to take a step back and take a fresh look at the situation…and sometimes we need someone else to remind us of this. Last year I was at a doctor’s appointment stating (although some could have interpreted it as complaining) my displeasure with getting older…my joints don’t work the way they used to, new wrinkles seem to appear daily, and it’s becoming obvious I’m well on my way to needing readers. At that point my doctor said, “It beats the alternative.” With that she helped me to realize not everyone gets the opportunity to grow old. Needless to say, I left that appointment with my tail between my legs and a new look on growing older.
The same lesson can be applied to the stock market. When we turn on the news and hear the Dow Jones Industrial Average has had a large drop in points, for example 500 points, we may be inclined to get worried. (It doesn’t help that the media reports this drop in the same tone as a plane crash.) However, when we put this into perspective, a 500-point drop from a 17,000 base is less than 3%. In addition, on average the stock market has experienced a 10%+ correction every 1½ years since 1957. That means we can expect to see a 1,700+ drop in the Dow at some point, and when we do we need to remember to keep it in perspective. We may not like it, but it’s normal.
Now, I’m off to a hair appointment to cover this gray!
- Written by Juli Erhart-Graves, CFP® Worley Erhart-Graves Financial Advisors