"The investor's chief problem -- and even his worst enemy -- is likely to be him self." ~ Benjamin Graham
As the movement of stock prices heads lower and into Bear market territory, investors are naturally questioning their chosen vehicle for investment, often making changes to their own detriment. Of course, media noise, with headlines screaming, "Worst Month for Stocks Since Depression" deafens the investor's ears to the sounds of their better judgment.
Are we in a recession? Where is the stock market heading? Should I buy now, anticipating stock prices will turn higher, or should I sell in the event they will continue to go lower? What type of investments should I hold now? What am I to do?
"We do not, in fact step out of the movement of things, ask 'What am I to do' and, having obtained an answer, step in again. All our actions, all our questionings and answerings, are part of the movement of things, and if we can work on things, things can work on us..." ~ John Anderson
The choice of investment vehicles is just as important, if not more so, than the vehicle itself. The vehicle should suit your needs and personal preferences to get you to your destination safe and on time.
The movement of things is beyond your control but choosing the means of navigating that movement is completely within your control.
We may prudently choose the means of reaching a particular destination but we often question our choice when the movement of things shifts directions -- precisely the worst time for changing vehicles.
"Journeys, like artists, are born and not made. A thousand differing circumstances contribute to them, few of them willed or determined by the will -- whatever we may think." ~ Lawrence Durrell
Consider a parallel scenario to the current investor dilemma regarding the choice of investment vehicles:
You are planning a long-distance journey and prudently select a vehicle that meets your travel objectives. The vehicle of choice is a car and it is economical and comfortable and meets all of your personal and specific preferences, such as safety standards and cruise control.
You begin your long journey and soon experience a traffic jam. You look ahead and only see a long line of cars with no end in sight. People are getting out of their vehicles and begin to speculate as to the cause of the traffic jam and how long it will last. You begin to see people abandoning their cars in disgust and frustration.
As the uncertainty mounts, you decide to sell your car for a rediculously low price and use the proceeds to buy a bicycle. At least, now, you will be able to move forward again! A few miles up the road, you see that the cause of the traffic jam is clearing and the long line of cars is beginning to move again.
Soon, you see the person who bought your economical and comfortable car pass you on the road as they cheerfully wave and honk the horn... and you begin to question your latest choice of vehicle, the bicycle, as you realize that your first choice was best.
"Our patience will achieve more than our force." ~ Edmund Burke
If you are investing money in stocks and mutual funds for the traditional (and prudent) purpose of making your money work harder for a long-term objective, such as retirement, it is especially crucial to select your investment vehicle based upon the combination of your comfort level with investing (risk tolerance) and the length of time required to reach your financial destination (investment objective).
What is happening around you at the moment of your investment decision, and any of the following moments that may challenge your decision along the way, will naturally enter your thoughts, but they should never gain influence over you and your journey.
Once you step into the movement of things, it is prudent to stay with that movement, regardless of its direction...
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