10/30/14 – Rollercoasters

A new experience for me was taking my family to opening night of the local fair. In case you were wondering, the fair allows visitors to enjoy an up close experience with farm animals and their respective odors. We stood in long lines to see pigs, cows, sheep, chickens, and Clydesdales. They even had pig races! I kid you not.

And that’s not all. My daughter took a camel ride and then sprung the inevitable question:

“Daddy, will you come with me on the elephant?”

Do any of you know exactly how wide an elephant is? I had to spread my legs so for apart that I (am embarrassed to say) needed two guys to help me get off.  And boy did I feel it the next day (but least I gave the elephant operators and trainers something to laugh about).

Aside from the animals, there’s the food: sausages, corn dogs, hot dogs, fried dough, pizza, deep fried Twinkies, kettle corn, cotton candy, candied apples and who knows what else.  There’s really nothing like eating a hot dog next to a pig that might have been related to it.

And what’s better when your stomach is full of heart-healthy food than amusement park rides!

“Daddy, will you go on this ride?” she pleaded.

“No, too spinny.”

“How about this one?” she asked again.

“No, too high.”

“This one?  This one?  How about this one?”

Finally I relented and joined her on the bumper cars, and I have to admit, it was fun. I was a kid again!

It’s funny how people will wait in long lines to smash into each other or careen around a track at 80 miles an hour on a gravity-defying rollercoaster.  But think about it, what do we really get out of spending a couple of minutes on a terrifying ride?

Nothing other than a sour stomach.

So when the stock market drops from the sky like a speeding coaster, and the butterflies start to flutter, when is the right time to get off?

Think about it. We can only get off the real coaster when the 16-year-old operator remembers to look up from his IPhone to stop the ride.

When it comes to the market, historically speaking, if you can survive the sour stomach, you will likely experience an increase in the value of your portfolio. If you got off the stock market ride in late 2008 or the first quarter of 2009, you probably still have a sour stomach. But, if you stayed on the stock market ride, you’ve probably performed very well since the second quarter of 2009.

Let’s reflect for a moment. We haven’t had a 10% pullback in around three years, so I’m actually not surprised at this downturn. The question now is whether it will stay within that range. The key to a market bottom is Europe, which may actually be in another recession. The European Central Bank (ECB), the equivalent to our Fed, needs to take more aggressive action, but don’t bet on it. The good news is that the U.S. economy is strong and getting stronger, so it’s unlikely that domestic markets will enter a prolonged decline.

Truth be told, I have been taking my fair share of Pepto lately, but I would advise not to jump off the ride. Instead, as things begin to settle down, consider putting cash to work by taking advantage of buying opportunities.

By | 2014-12-02T20:14:24+00:00 December 2nd, 2014|Client Conversations|0 Comments

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