Freaking Out Over Market Farts?

People tend to freak out over market farts. And I always get well-meaning people asking me if I’m doing OK when Mr. Market isn’t so happy. While it can be tough to watch 20% of your net worth evaporate in a couple of days, know that:

• It’s normal: Short-term volatility and non-linear growth are what you sign on for when you invest in stocks. It’s the price you pay for returns that beat bonds or banks over the long term.
• Zooming out, it’s not that bad: Looking at a chart of the S&P 500, we’re back to where we were at a couple of different times not even 12 months ago:

What To Do?

If you’re still in the accumulation stage: These market farts are great! You’re buying the same thing you bought last month, but at a discounted price.

If you’re going to retire soon: If you don’t have any cash (see my next point), perhaps it’s worth sticking around for a bit longer to accumulate a buffer.

If you’re recently retired: I hope you have a little cash cushion to live on. When Mindy leaves work, we’ll keep a little cash on the sideline. In times like these, we’ll live off of that instead of selling investments. We’ll keep 6-12 months of cash around.

If you’ve been retired a while: You’ve had the incredible fortune of benefiting from one of the greatest bull runs of all time. Since 2010:

• There have only been two down years. TWO!
• The markets returned over 10% ten times
• The markets returned over 20% six times
• The markets returned over 30% twice

These returns are staggeringly good. If you lived by the 4% Rule and retired in 2010, you have way more money than what you started with:

And finally, if you’ve unexpectedly lost your job, I’m sorry. My career lasted two decades and I lived in constant fear of losing my job (more below). I’d have horrible nightmares about it. I’d wake covered in sweat, my heart racing. It was terrible.

My fear was for nothing as I never lost a job, but I’m really sorry if this is something you’re going through now.

Us

I looked at our net worth this morning and we’re now down over a million from our all-time high set just back in February. Mindy and I may kill or postpone a big project we had been working on, but that’s fine. The project would have been fun, but life has already exceeded all of my expectations. I have nothing to complain about and much to celebrate.

My reason for pursuing FI was always security. Childhood chaos is tough. Money made me feel safe and secure. It puts distance between you and the past.

The more money you have, the more resilient you become. Life can throw a lot of shitballs at me which I can deal with either because I have the time to solve them or the money to pay someone else to solve.

You

I hope y’all are doing OK. If you’re reading this, you’re probably a saver, so can weather a financial shitstorm. At some point, it will stop raining and the sun will come out again. Life will go on and you’ll be stronger for having dealt with a little adversity.

Onward an upward.

Also see JL’s wise words.