January just ended, so you know what that means. It’s February. (I’ll be here all week. Be sure to tip your waitress) Okay, but seriously, what went down with the stock markets in December and January was pretty extreme. I can’t decide if the weather or the stock markets were more extreme in December and January. Probably the weather. That Polar Vortex thing was brutal.
Bear with me, I promise this is going somewhere.
Investing is hard. Allow me to present the last two months as evidence.
In December, the Dow Jones Industrial Index (a.k.a. the DOW) fell 8.7 percent. It was the worst December for the DOW since 1931. 1931! Remember what was going on in 1931? I do. The Great Depression. Oh, and by the way, let’s not forget that on Christmas Eve 2018, when the financial markets were only open for trading until noon (rather than the standard 3:00pm), the DOW dropped over 650 points. It lost 2.91 percent in three and half hours of trading. Christmas Eve last year was the worst Christmas Eve trading day of all time. No joke.
Then, seemingly from out of nowhere, The DOW rose nearly 1,100 points two days later. It was the largest point gain in the DOW’s 123-year history. From there, most of the stock market indices began to rally.
Which brings me to January.
The DOW rocketed up 7.17 percent. It was the biggest single month increase in four years, and the best January the DOW has had since 1989. 1989 was a long time ago folks. Field of Dreams had just come out. A gallon of gas was like $1.00. The B-52s and Phil Collins were soaring up the charts.
Like I’ve already said, investing is hard. In December, we went down almost 9 percent. Then, boom, we went right back up 7 percent the very next month. Back in December, the financial media were screaming at you that the sky is falling. There was talk of an imminent recession everywhere you looked/read/listened. The once promising economic outlook suddenly appeared extraordinarily bleak. ‘Experts’ were predicting another 2008 and calling for a stock market crash.
Instead, what happened? We bounced back. Just like every other time the DOW went down.
So, what am I getting at here? Simple. Don’t get your financial advice from a TV. Or a radio. Or a smartphone. Instead, have a plan. Know EXACTLY how much risk you’re taking with your investments. Here’s why. If you have a plan, and are comfortable with your investment risk, then you probably won’t bail, and sell all your investments, when things get tough. That’s important if you want to succeed.
And by all means, if you don’t have plan, and/or know EXACTLY how much risk you’re taking with your money, then please reach out to me. Today.