Monday, January 7, 2008

Getting a handle on Stock Market Volatility

Ever gone golfing with a friend and then after a few bad shots watch them explode? I have seen people throw golf clubs, knock over golf bags, throw down hats, and kick the cart after an undesirable shot. I have wanted to do the same thing at times! But, then I remind myself that I am out there to have a good time. I am not a professional golfer and I don’t play the game well enough to get that upset about a poor shot.

To earn the right to get that mad, you have got to become disciplined enough to become a good golfer. If you are not that good at a game, then there is no reason to get irate. Instead, relax and have a good time. That is the message from motivational speaker, Bryan Dodge. He asks the question why get so upset, when you are not that good?

That’s easier said than done. We all want to improve our skills and when we fail or make a bad shot, its upsetting. Its upsetting because we are impatient. We want to get better now, not next week or next month. Nobody wants to be just average, especially when we have tried to improve our game. Similarly, its frustrating in times like now, when the stock market declines are erasing large chunks of our hard earned money. You and I have been trying to improve our financial situation, gaining investment knowledge, reading PF books and blogs, building an allocation plan and then the
DJIA drops 4% right out of the 2008 gate.

Got Discipline?
Just like the golfer, you have got to be disciplined to become a better investor and build a retirement portfolio. It's easy to become impatient. But its very important to keep working towards your goals, even in stock market turmoil like we are seeing in the beginning of this year. If you have an asset allocation plan - stick with it. Keep investing using dollar cost averaging or value averaging at these lower prices and eventually things will turn around. We all know the key to successful investing is to “buy low, sell high”. Well, this is the time to “buy low”. Do you have the courage and the patience to be a successful investor? We are fixin’ to find out, aren’t we?

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