Are you emotional?

August 4, 2011 · 24 comments

Yesterday the Dow dropped more than 500 points, nearly five percent. Girl Ninja and I lost around $2,000 as a result. When I told her the tragic news she asked if I was really sad/mad about it.

Do I like losing money? Heck no techno, but that’s what I signed up for when I decided to start playing the investing game. I knew there would be days that I made money and days that I lost money. Yesterday was a loss. Ain’t no thang but a chicken wing.

Sure losing $2g’s sucks, but I got 40 years to make it back, and I’m pretty darn confident we will. For me, investing is not an emotional decision, but a financial one.

Are you emotionally affected by big drops in the market? How about big gains? Anyone think buy and hold is stupid?

1 tom

Nope… I was actually excited as my 401(k) stock matching was executed at the end of the day yesterday! So I just bought a whole bunch of company stock at a 5% reduction in price!

Score one for me!

2 David Justin Bibby

It doesn’t bother me when the value of my investments dip, at 34 years old, I have time to ride this roller coaster with all it’s ups and downs. I’ll still sleep well at night even if the economy gets worse…why? Because we
re debt-free, have emergency savings, we buy things dirt cheap (extreme couponing), and we live well below our means.

The only economy I’m worried about, if I worry at all, is my own PERSONAL Economy.

3 LLF

I would be super upset if I was a day trader. But I’m not. Plus I really don’t look at my 401k that much. I look at it every 6 months to a year, and if I earnings are in the green – they usually are, I am happy.

4 Nick

As a younger federal employee myself, I have all of my TSP in a L2050 fund. The asset allocation is pretty much on-par with what I was taught in college investments/financial planning classes, so rather than manually adjust it myself, I just threw it there. Are you considering moving your stuff to the G fund for a few months until this Euro-debt thing is sorted out, or are you just going to ride it out?

It was always drilled into our heads that you should just ride it out, but if I had moved it 3 weeks or so ago when I first considered it, my, say, 1000 shares could be ~1100 even right now after the huge dip in the last couple weeks. THAT’s what kills me — not the fact that the account value dropped (who knows what the retirement age will be when I get there…), but that I second guessed myself, and because of it, missed out on a great opportunity to cash in and substantially increase the number of shares I have just because the markets dropped.

5 cashflowmantra

No, I lost my emotion in the market. Lose here and there, lose more and more and eventually it doesn’t really matter. I have protective puts so my maximum loss in 10.8% no matter what.

6 modernhamlet

I buy and hold guns, canned goods and antibiotics. Figure that’s a great long term investment. ;)

7 Jon -- Free Money Wisdom

Eh, it doesn’t really affect me that terribly. I dabble in the market — but I refrain from really dropping a lot in it. I’m sorry to hear you lost money! Hopefully it goes up again.

8 Norman

Ok, is anybody going to admit that they get emotional about the stock market? Even though most people do, nobody will admit to it. As for myself, hell yeah, but I take action when I’m not emotional so I’m thinking rationally.

9 slug | sunkcostsareirrelevant.com

You only lost money if you sold.

10 Momninja

glad I had no options maturing at that time…but no emotion stock is a long term proposition.

11 Larry

This wasn’t just any old loss, I’m a lot closer to retirement than most here, and I lost quite a bit more than $2000. It was “the ninth-worst point loss in the Dow’s 115-year history and the worst loss since December 2008.” Still, I’m higher than I was at the close of 2010, and at 1PM ET the Dow is up 75. Just sit back and hang tight.

12 StackingCash

Being closer to retirement age, shouldn’t the majority of your investments be in safer bonds?

13 Larry

I’m about 55-45% stocks and bonds. By retirement time in about 4 years, I want to basically reverse those percentages. But even though bonds are less volatile than stocks, they still carry some risk, for example if interest rates start rising.

14 Melissa

In 2009 I made $4000 by buying shares at super low prices and waiting it out. Only regret is that I didnt hold onto my Citibank longer. I bought 100 shares @ $1 a share and sold it at $3 a share. 2 weeks ago I saw it trading at $40. I would have held all my shares longer but the bill for the new AC unit came in. Now trying to scrounge up some change to play the game again.

15 Norman

Actually, you did good. The reason Citi stock is selling that high is because they had a 1 for 10 reverse stock split, so if you had 100 shares, you now only have 10 shares…like me…waah!

16 JP

If you’re talking about Citigroup (C), they had a 1:10 split back in May…

17 Jake

“You only lost money if you sold” is exactly right. Just surf the volatility wave! I hope everyone had a few buy orders today to swipe up an easy couple percentage points of earnings.

Ninja, I apologize in advance for this douche comment. “Loosing” is not what you meant in your post today. You actually meant losing. I have an extreme case of OCD for correcting folks when these two words are used interchangeably. Please do not ban me from your blog.

18 krantcents

I like it a whole lot better when the market goes up. Does it bother me? Yes, for a little while then I shake it off.

19 Kevin @ Thousandaire.com

The market is on sale. Buy now while everything is cheap!

20 StackingCash

Hello :)

21 Melissa

I think a lot of it depends on your personal circumstances. Back in 2008 when the market REALLY crashed, I had a few thousand dollars sitting in an investment that I needed to pull out within the next year to pay for my tuition and expenses. As soon as the market started to tank, I flipped and pulled it all out and stuck it in my bank account. I couldn’t have afforded to lose as much as $50 because that money was accounted for, and I needed it, and I couldn’t afford to wait for it to go back up again. Even now, if my retirement investments got hit, I’d be upset about it, because I’m hoping to use that money within the next five years to either go back to grad school or use as a downpayment on a house (two things my bank lets me do with retirement savings without penalty), so losing $2000 would seriously limit my options. If my retirement account was really a retirement account that I didn’t plan on touching for 40 years, then I’d be a lot more c’est la vie about it.

22 Kim

So now that the US’s credit was downgraded over the weekend, I see another huge drop coming in the coming week. And I am consciously telling myself – to avoid all financial-markets news. Bury my head in the sand. Don’t look at my balances for the next month. It will be hard, but otherwise I will send myself into panic mode. It will come back; it always does. Quick, someone give me a shiny ball to distract me!

23 South County Girl

I just found out about this today.

I took all my money out of the market a year or so ago after i’d experimented for a few years with a roth when I was 20… Eventually I realized I didn’t like the funds offered so I converted all 19k to a Roth Ira savings/cd account at ING… and I’m just now getting back into the investing bit after doing more research.

I’m kind of glad I missed out on this scare… I would have flipped out!

24 leonil

of course i would get upset!!! that’s a lot of shoes,bags,toys for my kids,or nice dine outs with my family at a fab restaurant and probably a nice vacation! well,that’s just me. that’s my motivation in certain things. :-) anyways, hopefully you’ll get it back.

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