US Debt levels hit a postwar record this week and the debt surpassed 100% of GDP for the April to June quarter. That would put the US in the company of a esoteric few – Japan, Italy and Greece. In the meantime, the Dow briefly topped 29000 before pulling back dramatically later in the week.
The sell-off has a series of pundits beginning to call for another major correction and of course, that further precipitated more selling on Friday. In times of crisis and uncertainty, there is always a sense of vulnerability that creeps into investors. When things are going well and the market heads higher each day, the confidence among investors, while being subtle, builds a feeling of invincibility. But then, a 5% correction starts to rattle that faith and then another 5% drop erodes it even further and by the time the market is down 15%, the individual begins to go into 5 step process of denial, blame, anger, depression and finally acceptance that investing randomly in the stock market was not a good idea to begin with.
Future Wealth’s View
Just last week in our report, we had stated “There are those who despite phenomenal returns since March, still feel empty on not having gotten aboard the Tesla train or the Zoom Video express or any number of the Covid stocks.” The desire for 100x or 400x return in Tesla’s case, dwarfs logical thinking when there is plenty to be happy with 20% or 30% returns. Until, the market corrects and those 100x returns start to disappear very quickly.
In Greek Mythology, there is the story of Sisyphus, who was deemed by the gods to push a boulder up the hill, only to watch it roll down again and again. Investing in the market, in some ways, is akin to the mythical boulder. In the end, instead of blaming a million other things for the boulder (or our investments), rolling down again, it is better to take ownership of the boulder (or the investments). Investing responsibly means stubbornly but wisely persisting, rather than giving up to despair.
When adversity turns our lives upside down, stoicism is key.