Tuesday, August 25, 2015

When Markets Tumble

I knew that yesterday was likely to be a rough day for the stock market--one of the hazards of being an interconnected world is that when one market tumbles, the rest are likely to tumble too.

It's not the first time I've watched markets tumble.  I remember in 1987 coming back from my grad school classes and hearing about the drop in the DOW.  It was late October and getting dark already; I remember feeling afraid.  I called my mom and dad, who lived in Northern Virginia, and they were remarkably unconcerned about it all.

Markets rebounded quickly, and I felt silly for feeling so scared.  So when markets got wobbly in October of 2008, I talked myself off my ledge of fear.  But I do remember walking the halls in school thinking about how much ground the stock market had lost.  I did wonder if we were looking at the start of a Great Depression.  I chided myself for being a drama queen.  Little did I know.

Sadly, that recovery took much longer.

You might say, "Oh?  We're recovered?"  I, too, know plenty of people who have yet to recover, yet to be back to their earnings of 2007.

All yesterday, I wished I was at home--I like to think I'd have been buying some stocks.  But I don't really keep track of individual stocks the way my grandfather did.

All the way to her death, my grandmother didn't talk much outside the family about my grandfather's stock trading.  She said that after the Great Depression, people saw buying stocks as gambling.  I'd love to know how my Lutheran pastor grandfather came to have a different impression--I think it was because of the attitude of one of his church members who taught him about the market.

He bought shares in companies that he knew--his portfolio included power companies and phone companies and oil stocks.  Every morning he opened to the section of the newspaper that had the market reports, and he noted the price of shares into his little notebook. 

He got the money for stocks by selling honey from the hives in his back yard.  He bought a share or two at a time.  He reinvested his dividends.  Over time, his strategy was a successful one.

I will keep with my investment strategy.  I'm contributing to my 401K, even though I no longer get the company match.  I'll keep some money liquid, in case I'm laid off.  Like most homeowners, my largest investment is likely going to be my house.  I'll continue to take care of it.

But I do wish I had a bit of courage to buy more stocks when the markets tumble.

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