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THEY SAY IT ALWAYS
BOUNCES BACK
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I came home the other day and there it was, sitting on the
kitchen counter, ominously waiting for me to open it. I had no intention of
doing so.
"Open it," said my wife. "I opened mine, and I
survived. At least I haven't applied for food stamps yet."
"Why should I?" I replied. "It's depressing. I'd
rather have a cocktail."
We were talking, of course, about our respective retirement accounts,
and the monthly statements that show, month after month in 2022, how much
money we were losing.
"If I don't open it, I can pretend all is good and just wait for
the market to rebound, like it always does," I said without an ounce of
confidence.
"I lost 5% in July," she said. "I just want to see if
you did any worse. Misery loves company."
I couldn't argue with that philosophy. I went ahead and opened the
statement, and quickly did the calculations on my IPhone.
"Got you beat," I announced. "I'm down 6%. Our nest
egg is going down the tubes."
At least we were playing with house money. Like everyone else, our
accounts had increased dramatically over the years, so we were just giving
back all those gains.
Where I was really feeling the pain was in the office and my
company's finances. I remember it well. It was last August, and my company
had some cash that wasn't designated for taxes, for once.
"LET'S PUT THAT MONEY TO WORK!" I cried in my best CEO
voice. "We're getting less than 1% in the money market. It's time to
make that cash grow!"
I called our investment adviser and told him I wanted to put our
money to work, but only in very conservative investments. I certainly wasn't
going to risk our company nest egg.
It's now down 20%. I can only imagine what it would be down if I was
a risk taker.
Fortunately, we can leave it in the market indefinitely and wait for
the rebound. Because it always rebounds, right?
Well, yes, historically speaking. Everyone says don't panic. Don't
sell at a loss. Just wait for the market to turn around.
Then who is selling and bringing the market down? Somebody's
not getting the memo. Somebody is cutting their losses and driving the
market lower and lower. Do they know something I don't?
The market is such a weird way to make, or lose, money. All these
investments in companies and bonds and mutual funds that most of us know
nothing about. And we're at the whim of unknown elements that drive our nest
eggs up or down.
I'm still fascinated by the events of February and March 2020, when
COVID hit. The market dropped 37 % through those months, and the news was
bleaker every day.
We all thought another Great Depression was coming. In 1929, the
market lost 25% in the first two days of the crash in late October. By
mid-November it was down 50%. And we all know how it went from there.
Yet on April 7, 2020, as the economy came to a grinding halt and
businesses closed and unemployment hit record highs, the market started
climbing back. By the end of the year, when COVID was raging, the market was
at an all-time high.
That made a lot of sense. To someone maybe, but not me. I have no
idea why the market does what it does, yet I still invest in it because
there's nowhere else to go.
Except, perhaps, Las Vegas.
Meanwhile, back at home, I studied my statement for a grand total of
about 3 seconds and then tossed it. I made a cocktail and mused about what
we would do when our accounts hit zero.
"I never wanted to retire, anyway," I told my wife. "I
like doing what I do."
"Glad to hear it," my wife responded. "I can always get a job
again, too. I've got skills."
I took a sip of my cocktail and she took a sip of her wine as we
reflected on working until we keeled over.
"The market always rebounds, right?" she asked.
"That's what they say."
She was thinking. "So we shouldn't sell everything and leave it
in cash and feel secure that we won't lose any more?"
I wasn't sipping anymore. I was gulping and thinking about last
August when I put our money to work and lost 20%. "Nah, that would be
stupid. So they say."
She nodded and then sipped some more Sauvignon Blanc. "So they
say."
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