Tuesday, June 10, 2014

Don't Worry --- Be Happy

Some things we can control and some we can't. Put the short term gyrations of the stock market in the things we can't control camp.

That said, the ultimate human freedom has been described accurately (at least in my view) as our ability to always choose how we will react to whatever happens to us along life's way, while recognizing that we often won't be able to control what those happenings may be, good or bad.

In simple terms, while frequently we have no control over what happens, we always have complete control over how we react to what happens.

And that freedom applies to the stock market's short term gyrations and all other financially related matters as well.

Let Go of the Money Worries contains great advice for all of us:

"How many times have you had a conversation when you or the other person said something like:

“I’m so worried about the stock market.”

“I’m so worried about retirement.”

“I’m so worried about the value of my home.”

Assuming you have said or heard a derivation of one of these statements, ask yourself a big question: How has that worked out for you? Can you think of a single time when the act of worrying about the stock market, retirement, housing prices or anything else in your financial life has helped?

The act of worrying actually hurts, not helps. Last year, Joseph Engelberg and Christopher A. Parsons published a study that looked at worrying about the stock market specifically. They wondered what impact a drop in the market had on investor psychology, and they found something interesting in hospital admission records.

After looking at nearly three decades of data, Mr. Engelberg and Mr. Parsons ... found that a sharp decline in the stock market was followed by a higher rate of hospitalizations over the next two days. Mental conditions, like anxiety, were particularly prevalent in these situations....

This is a case where simply being aware of the negative impact of worrying is part of the solution. Worrying becomes a habit. It is something we often do without even recognizing that we’re doing it. If we can simply learn to recognize what worrying feels like, with time and practice, we can become more aware of this useless habit and change it by asking ourselves a few simple questions:

What am I really worried about? Is it something in my control?

If it’s in my control, could I resolve my worrying by doing something differently?

If it’s not in my control, do I gain anything by worrying about it?

While it sounds simple, the answers to these questions can reveal not only what’s really bothering you but also a way to help remove some of the worry. I can’t promise that you’ll never worry about anything again. But before you decide to waste time worrying, I suggest you remember what Calvin Coolidge told Herbert Hoover: “Mr. Hoover, if you see 10 troubles coming down the road, you can be sure that nine will run into the ditch before they reach you and you have to battle with only one of them.”

That seems like good advice. It may even help keep you out of the hospital."

Summing Up

So don't worry --- be happy.

Investing in a low cost diversified portfolio of blue chip stocks over the long haul will in the end make us happy.

And that way of saving and investing is the best way to provide ourselves and our family members with adequate funds to enjoy a comfortable retirement.

And besides, we can't control the short term moves of the market anyway.

We can, however, always exercise control over how we react to those fluctuations, choose not to worry about them, and simply stay the course.

That's my take.

Thanks. Bob.

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