Ben Carlson is one of my favorite financial authors because of his ability to sift through the noise that comes from Wall Street. He recently wrote about “Observations On the Market Correction” and the biggest take-away for me was the fear, panic and uncertainty that dominates the news cycle. We’ve all seen the ups and downs of the stock market, yet these are headlines you just don’t see despite their truthfulness. Here are three that Carlson pinned that resonated with me:
YOUNG INVESTORS REJOICE AS MARKETS CRASH, PROVIDING BETTER ENTRY POINTS AT LOWER PRICES
If you are in your 30s or 40s then keep calm and make a contribution to your retirement. You should not care what stock prices are today. Or next week. Or even next year. Your investment time horizon is decades away. And because we are living longer, your investments could be engaged for 50-60 years before you need to use them. Time is your greatest ally, and corrections are your friend to help you accumulate more shares.
DIVIDENDS YIELDS RISE ALONG WITH EXPECTED RETURNS AS STOCKS FALL
This is not as clear to see at first, but when the price of a stock goes down, the dividend yield it pays goes up. When you are in distribution phase of your portfolio (a.k.a. retirement) we believe having interest and dividend streams from your investments provides options and flexibility to meet your cash flow needs. Lower prices help us get more cash flow for your investment dollars.
MARKETS FALL FOR REASONS NO ONE CAN BE SURE OF BECAUSE INVESTORS HAVE MUCH DIFFERENT GOALS, OPINIONS, STRATEGIES, TIME HORIZONS AND RISK PROFILES
The most challenging thing to do in the information age is to sift through all the “junk” and find insight that can help you and your situation. This is why we exist — to help you filter out headlines and stories that don’t even apply to the life you are building. Make sure you consume information that moves you towards making the most of the one life you have to live.
Cheers to your financial life!