I distinctly remember the 2008 crash, because it was my first year working at a financial firm. I remember the groan that went up after every closing bell when we – and we were just the support staff – realized how much the market fell.
I was particularly excited by the prospect that they would throw the “circuit breaker,” which happens when trading is halted because too much money has been lost. I find the idea very comforting. The market can’t lose 30% in a day. Sure, it can lose 6% a day for six days in a row, and then we’re all screwed, but not all in one day.
Since 2008 they have changed the circuit-breaker rules. Now, If the S&P loses 7%, trading halts for fifteen minutes.
So I have decided (and this is just for me, this isn’t advice) that I am going to stop looking at the lower right corner of any news channel on volatile days. Dow drops 1,000 points? Don’t care. Wake me up when the S&P drops 150. Anything else I’m just going to write off as political instability leaking into the market.
4 responses to “Volatility”
There’s also the “and exactly *what* would I do about it if it does all smash up?” question if one is not a professional in the field (or, I suppose, unless one had obliging contacts in the field). So far, just leaving money in there rather than selling out whenever things drop has seemed like a generally good plan, as long as you’re far enough out that the *news channel* is how you find out about market crashes.
I’m in favor, in general, of being an Informed Global Citizen, but if there’s something you can’t do anything about that is also going to stress you out a ton to try to keep track of, then for goodness’ sake stop hovering and get done what you *can* get done…
KC – staying calm and standing pat has always been my strategy. It’s just I’m old enough now that retirement is a factor, and when you retire on a down day it affects the rest of your life.
True, you do not want to pull the money out of your retirement stock market account during a Particularly Bad Bit. Ideally one would have enough other savings to be able to putter along until the stock market levels somewhat, or something. But we have those “target retirement date” accounts that gradually shuffle things out of the stock market and into more-stable investments, so hopefully that will… work like it is supposed to. Or something.
KC – I think I’m going to start shifting stuff five years out. Which is soon.