By: Laura Walton AFC®
Hyperbole – synonyms: exaggeration, overstatement, magnification, embroidery, embellishment, excess, overkill. There’s been a lot of hyperbole in the financial news the last few days – below are some examples I culled from news stories:
a big whoosh lower
the Dow plummeted
two huge sell-offs in a row
stop the bleeding
plunged a record 1,175 points
the stock market freakout of 2018
And, as if words aren’t enough, the drama in the announcer’s voice will command your attention. You may not want to listen but you can’t help yourself and it’s anxiety producing!
When we ask participants in the 3rd Decade program “what the Dow did today?” they’re rewarded for answering “I don’t know”.
What the Dow did in the last few days should be irrelevant if you have a financial plan that matches your financial goals and your tolerance for risk.
Whether you’re decades from retirement or in retirement, your plan should be one that allows you to take this kind of hyperbole and this kind of market in stride. Remind yourself that you’re on track and that market risk is built into your plan.
I’ve heard many possible explanations put forward – inflation fears, wage growth, rising interest rates, and trading algorithms to name a few. The most honest comment I’ve heard was that reporters were hearing from forecasters who had predicted the drop but not from those who thought the market would continue to climb. The bottom line is that no one knows, no one can predict and, therefore, the best defense is a financial plan you believe in.
And, oh, by the way, to quote the very last line of one article, “The Dow is still up 21 percent compared to a year ago”.