Do market gyrations keep you up at night? Does the fear of an impending major market meltdown keep you from being able to relax?
I found my antidote to the panic of market crashes. I don’t let them affect me because I don’t play their game.
Much of the human response to market hysteria is based on (here it comes…) fear of missing out. People think they must not only do as well as the next guy, but actually beat the market.
Maybe some can beat the market, but I suspect that there is a too large a price to be paid for all the effort that needs to go into beating the market. While a beat the market expectation has the participant making more money than they would if they had bought index funds, I would contend that the downsides in emotional instability, anxiety, and stress are the higher price to be paid.
Who Can Do It?
Not all of us can be Peter Lynch or Warren Buffett, to name just two. There are certainly other who have done so. They are out of my league. I don’t have an army of analysts at my beck and call. I don’t have the enormous amount of capital that they had or have.
The upside is that I do not need to please others, only myself. I do not live or die by the latest quarterly results. That tar pit is reserved for those whose occupation or ego requires it.
What Game Is This?
When I mention I don’t play their game I am talking about not buying into the expectations that in order to be financially successful I must buy and sell, trade often, listen to the market pundits and swallow Wall Street’s hype machine of the week. I can let others jump into the arena. I take a different path.
By focusing on dividends, my aim is to increase my income. Dividends usually increase over time, so as that is all I aim for, then I do not need to do much else. Of course there is the need to participate in the investing world to some extent, namely to buy dividend-paying stocks. After that, I can ignore most of the rest of what Wall Street says and does.
I do want to keep an eye on the companies in which I have invested. So I do read some financial web sites, and I do track prices and some statistics. That is all done in a few minutes a day. It all is not a full time job for me. I set it all up and let it run. Most of my time is spent on other things.
When a company that I have invested in gets overpriced, I do not buy additional shares. I wait.
When a company that I have invested in suffers a decline, I take look at the situation. If I feel (oh, here it is again: Feelings!) has a good chance of succeeding in the long term, I may take advantage of the situation and buy more shares. When I say ‘take advantage of the situation’, I mean I may buy more shares at the then lower prices. Buying low means that my dividends will, if successful, increase and a result I will have more shares because I usually reinvest my dividends.
The whirlwind of what comes from Wall Street in their many forms, such as financial advice, so-called news, exhortations, sales pitches, research, forecasts, and so on are all designed with one thing in mind: separate you from your money. Some are seemingly logical or slick or crude or whatever… they appeal to one’s vanity or desire or ego or fears, and so on, all of life’s varied emotions. How can I exist without falling into their snare? My experience is just my experience, and perhaps will not fit many others or even any one else. By staying true to my path, my decisions on how I wish to invest, and ignoring the siren calls of the many potential distractions, I can stay financially true to myself.
The challenge really was in finding my path in the first place. Once I locked on to it, it became relatively easy. But initially, I was unsure of how to make a financial life for myself. I read many books on investing methods and strategies, absorbed what I could, and tried to see a way forward.
Perhaps it was on being a little older at the time, but when I thought about two potential outcomes did it later became clear. One potential outcome was a situation where I owned a large amount of appreciated non-dividend paying stock that was doing well. In such a case I could understand myself as happy have having such a stockpile (pun intended).
The other outcome is where I owned stock but the dividend income was my focus.
In the first situation, I realized that in order to use the appreciated stock, I would need to sell it. Since it was non-dividend paying stock, it was all on paper until I sold some. In such a case, I would have the cash, but then no longer own the stock.
In the second situation, I did not sell anything, continued to own the stock[s], but the dividends flowed to me nonetheless.
When I weighed the results, dividends won.
My comment of “perhaps it was on being a little older at the time…” was my realization that a retired person (at least in my case) needs and wants income. Having a healthy stash in the bank or broker was nice, but for a retiree, income makes the world go round. Since I would be not working, where would money come from? Social Security for sure, but as we know, that often does not cover enough expenses. So additional income would be needed. And dividends became the successful solution.
Your actions, or reactions? Let me know here.
The Chart of the Heavens is from “Geographical Study” by Levi Walter Yaggy, published in 1887. Courtesy David Rumsey Map Collection. In the public domain.
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