In my four and a half years of investing, I have been paying close attention to my psychology as we go through the changes in the market. Last fall and winter, the market took a sizeable dip, and I wrote about how I had trained myself to look for this as a buying opportunity. I was gratified to see that, in the face of said dip, I happily bought some extra shares… at a discount 🙂 Also, my faith was soon vindicated, as the market quickly started going back up at the beginning of 2019.
Right now I’m not necessarily focused on buying extra shares on discount (although I look forward to doing it again!), yet I am equally as interested in my own psychology as I ride the stock market roller coaster. Yesterday, the S&P 500 (a collection of U.S. stocks that is often looked upon to indicate how our stock market is doing overall), went down 2.6%, during a month that has been rocky to say the least.
The interesting thing is, when I saw that this had occurred, I did not get upset at all. In fact, on the contrary, I was merely curious! “Hmm,” I said to myself. “I wonder what will happen next.” As I became aware of my neutral or mildly positive reaction, I knew that this was a good sign for my investing future. Or at least, it was not a bad one.
I was aware that the drop in the stock market was fairly steep. In fact, over the past few weeks, the narrative has tended decidedly towards the negative, with weekly losses accruing. I’m also aware that for some people, this sparks fear or intense discomfort. I have met people who shudder at the very thought of losing money in the stock market.
Many of them have been burned in the past from taking on more risk than they were actually prepared to handle. I have not been burned in this way. At least so far. I do not take for granted that investing will be easy. In fact, over the past few months, I have made a few shifts in my portfolio, buying both bonds and REITs with the expectation (or hope) that this will further diversify things and mitigate risk.
I hold no delusion whatsoever that my portfolio is risk-free. It is not. So while I continue to pursue an investing program that is assertive on stocks, I cannot know for sure how I will feel after a significant market downturn.
Will I be glad I took such an aggressive position? We shall see.
Right now I remain calm about the prospect of forthcoming changes from Mr. Market. Yesterday’s cool, calm, and collected response to it is a good sign. I hope to be able to ride out future investing storms with my positive attitude in tact. 😉