The Grocery Line, Resilience And The Dow

By October 27, 2015Investing


The Grocery Line, Resilience And The Dow 10 27 2015Approaching the checkout counter at a local store, I placed my items on the counter.

“Will that be cash or credit card?” the harried clerk asked.

“Credit card,” I answered.  A slight frown crossed his face.

“Is that a problem?”

“Well, our credit card machine went down about an hour ago and I have to do it manually, if that’s ok. I’m REALLY sorry!”

“No worries, the world isn’t coming to an end because of this.”

As he took my card and started filling out the charge slip, referencing each entry with a “cheat sheet,” he was obviously flustered. A glint of sweat appeared on his forehead.

I smiled and assured him that it was no problem.

“There, I think that’s it. I just have to call it in on the phone.” His eyes rolled with impatient frustration.

“You might want to put my name on the slip,” I offered, smiling.

“Oh yeah, thanks…” His sweat level was now reaching Zumba class proportions.

After the “ordeal” was completed, he offered me several samples and thanked me profusely for my patience.

Walking out of the store, it struck me how much technology has changed and with it, our expectations. It was as if I’d asked him to get up and change the channel on the television without a remote control.

Even as we quickly adapt to changes that make our life simpler, “progress” can make us less resilient.

He surely didn’t display the ability to get through a minor glitch without going into “flummox mode” despite my best efforts to assure him that this wasn’t the end of the world and I wasn’t going to scream, carry on or threaten to take my business elsewhere.

Which brings me to the Dow. During the latest round of market volatility and fear-mongering headlines, investors had the opportunity to react out of fear, to flip out, to make hasty decisions or to do nothing. The people who sold when the Dow dipped—only to see it rise the next day—were left feeling frustrated and regretful.

Our human-ness relies on our ability to think and decide. It’s a really good trait when applied to most situations. The problem with making buy-sell decisions in the stock market is that we are typically fooled by our beliefs.

Let’s look at the facts:

  1. US markets have been up for 6 years.
  2. Certain foreign economies are currently in really bad shape, while others are going through their own cycles.
  3. There are a lot of question marks about the future.

Add up these factors and you can make whatever conclusions make sense to you. Maybe we’re due for a correction, maybe this is just the end of summer doldrums, maybe this is the beginning of a recession, maybe this is just the start of the next rally, maybe oil prices will firm up and all our worst fears will be averted, maybe, maybe, maybe…

The fact is, the market will be what it will be without any help from you. And that any short-term decisions you make with long-term investments is more likely to be a mistake than a good decision.

So ignore the headlines, coffee shop talk, tweets and HuffPo stories predicting the end of world and roll with the punches. Like the broken credit card machine, the market doesn’t always work the way you want it to.