But on the investing front, the start of the year hasn't been nearly as enjoyable. The S&P500 is down nearly double digit percentage points in just the past six weeks, and the bull run that we've been on since the depths of the financial crisis has, at least, stalled. If you're invested in American markets, you've probably lost a good bit of money in the past month and a half.
I notice my behavior shifts pretty dramatically when markets take a dive. If I see that the market is having a really bad day, instead of just waiting until the beginning of the next week and investing as I normally would, I check to see if I can invest today, you know, since it's such a great opportunity. I'll look for cash we can allocate to investments instead. I'll try to reduce other budget categories, like pesky travel or restaurant line items, to invest more, today.
The downside is that, even if markets drop 2% today, there's no indication whatsoever that this is "the bottom", whatever that means. What happens if the dip continues tomorrow?
Well, if that happens the process repeats all over again. I look for budget line items to reduce, for spare cash to invest, all in the hopes of getting in on this investing opportunity that's good for one day only.
And what if the dive continues? The whole process starts over again, and then we lather, and then we rinse, and we repeat.
This behavior seems pretty similar to my purchasing behavior when retail goods are on sale. It's why we have so many jars of Simple Truth organic pasta sauce in the pantry, even though it's pretty mediocre. I cannot resist the siren call of the good deal, which changes my purchasing behavior and I find myself buying a shelf full of bland pasta sauce just because it says "organic" on the label, just as the soft curve of the market trend seduces me, and I feel myself reaching for my wallet to buy more investments than I thought I would.
I wonder if I'm alone in this sort of emotional buying behavior, and the rest of the investing community just sticks to their plan, and buys all their investments on payday.
Or is this is a common thing among us frugal folks? Instead of being tricked by the typical marketing for new cars and designer clothes, are we instead induced to buy any time the market is on sale?
How do you react when the market dips, my friends and loyal readers? Buy more stocks, perhaps at at a broker like Glenmore Investments, trying to get a good deal on investments? Go the other direction and pull your money out of the market, waiting for a better time to invest? Just stick with the plan? Let's hear it in the comments below.