Perspective with the wild ride

The stock market took a ride this week worthy of Cedar Point’s “Steel Vengeance,” its newest roller coaster opening this year.

For the week, the Dow Jones Industrial Average closed down 5.2 percent, marking its largest weekly decline since January 2016, reported Market Watch, a financial information website that is a subsidiary of Dow Jones & Co.

Twice during the week, the stock market dropped more than 1,000 points in a single day.

According to the Washington Post, investors lost $3 trillion – with a “T” – in stock market value in one week.

A little bit of that lost value belongs to me.

It’s happened before

I’m one of the fortunate people who has a 401(k) from 24 years working at one company. It’s still 100 percent vested in stock mutual funds, a very aggressive plan, especially for someone my age (57). My wife and I have other, more conservative, investments as well, so I’m OK with a risk-taking 401(k).

In 2017, the Dow Jones Industrial Average rose 25 percent for the year, its best showing since 2013, said cnn.com.

Neither this week’s big decline nor last year’s big gains were unique. Both scenarios have happened before, and relatively recently, too.

Investors, who set a monthly record for sinking money into the stock market in January, pulled their money out at a record pace in the week ended Feb. 7, reported EPFR, a Cambridge, Mass., data firm.

Yikes. Too many investors bought high and sold low.

Take a deep breath, everyone. We’ve been here before, and survived.

Investing for the long term

I opened my 401(k) in the mid-1980s when I was in my mid-20s, and contributed to it for more than two decades. A small company match certainly helped. So did a wonderful stock run-up throughout the 1990s. Easy money, I thought.

I can live only in the moment, but if I live only for the moment I will miss so much.

Then the stock market crashed in September 2008, losing more than half its value by March 2009. My 401(k) lost about 40 percent of its value.

It took several years, but my 401(k) did recover, and his since grown much higher.

It’s a retirement account. I’m in it for the long term. In 2008, I knew I wasn’t going to start cashing it in for another 15 years or so, at least. So, the losses were only on paper.

That $3 trillion in value lost this week is on paper also. If you’re living off of that money, you probably should be preserving capital in more conservative investments. The stock market is for long-term growth, in general. (Some stocks are more volatile than others, of course, which is why every financial adviser will say we should diversify our portfolios.)

I haven’t checked my 401(k) balance recently. Neither has my wife (she’s more on top of it than I am). I’m sure it lost value this week.

But I’m not ready to start cashing it in yet. So I’ll just ride the wave.

Risk tolerance

Part of this equation is risk tolerance. Did I lose sleep this week when the stock market got volatile? No. I have a fairly high risk tolerance.

If you’re an investor and you did lose sleep – or you pulled a lot of money out of the market this week – then you probably are investing too aggressively. There’s nothing wrong with being a conservative investor. You won’t make the big gains in a boom market, but you won’t lose big during a correction or recession, either.

Each of us needs to determine our own risk tolerance. And also determine what the money we’re investing is for. Retirement? A nice vacation? Christmas gifts? Something else? It’s all good.

With the stock market, we need to take the long-term view.

Bigger rewards later

That goes against today’s instant gratification mindset.

We’d rather spend the money we make, all of it, rather than save some for a rainy day. We buy the latest technology – does every child, much less adult, need the latest smartphone every time a new one comes out? And I know people who buy lunch at a fast-food restaurant every day. A brown bag lunch is much more nutritious and costs a lot less. Eating out every so often is great – we do need to treat ourselves – but every day is an extravagance many of us can’t really afford.

Of course, if everyone acted like this, the economy would slow down because we wouldn’t be spending so much money. But we’d have more savings to spend on more meaningful, and possibly bigger, things. Saving money for a nice vacation or a new vehicle takes time and effort, but the rewards are so worth it.

Not going into debt for those things is one of the biggest benefits.

The future will come

Life in general is a lot like the stock market. It has its ups and downs, successes and failures. I’ve had great jobs and been fired. I’ve had emotional highs and lows (although I don’t often show them publicly). I’ve had great health, but I know I won’t live forever.

How do we handle the “life is not fair” moments, as well as the good times?

My retirement is much closer now than it was 30 years ago when I began investing. Starting to plan for my retirement when I was in my 20s will have a huge payoff very soon.

A big-picture outlook on life is so worth it. I can live only in the moment, but if I live only for the moment I will miss so much.

Take a deep breath. Plan ahead. Think long-term.

On average, Americans can expect to live 78.6 years, according to 2016 data published by the National Center for Health Statistics. Women can expect to live five years longer than men: 81.1 years vs. 76.1 years.

People who die young make the news, but chances are good that you and I both will reach retirement age. We should plan for it.

If we do that well, the roller-coaster ride of the stock market won’t cause us to lose sleep.

Not too much, anyway.

 

Advertisements

Disappearing colors: What if?

Imagine discovering that a color has vanished! How would it change a life, a town or a world?

Youthful Destination Imagination participants in the Fine Arts challenge this spring had to answer that question and create an eight-minute skit about it. DI, as it’s called, requires other elements in the skit as well.

It’s awesome to see what elementary, middle school and high school students do with a question like that. As the Region 16 (Cleveland area) challenge master in Ohio for that challenge, I saw some creative solutions. I saw more creativity at the statewide event several weeks later.

Without pilfering any ideas from teams of young people that I saw, I decided to come up with my own answers. What do colors represent? What would life be like if a certain color disappeared?

As with all Destination Imagination challenges, there is no one correct answer. Red, for example, has many “meanings” – danger, anger, blood, courage, sacrifice, a sunset, autumn, lips, heart, passion and energy, to name a few. What does “red” conjure up in your mind and soul?

What might happen if a color vanished, and could we get it back? Here’s a few ideas to stoke the creativity in all of us:

Black

black

Black represents justice, as portrayed in the robes of a judge or clergy.

With no justice, it’s every man and woman for themselves. No laws or morality exist to reign in abusive behavior. There are no such things as right and wrong, because there’s no one to define them, and no respect for anyone who would try to determine them.

To find black, we’d have to discover – before we killed ourselves off – that setting standards higher than ourselves is essential to our survival. There has to be a higher purpose than self-centered idealism. A judge somewhere will have to enforce laws that all of us must follow, whether we agree with them or not, or we will perish as a human race.

Blue

blue

Blue means cold. No cold means no snow. No ice, outside or inside. No cold drinks, only lukewarm sodas or milk.

No refrigerators, since cold doesn’t exist. Meat and dairy have to be eaten as soon as they are processed. They won’t last long enough to buy at the grocery store.

Antarctica disappears. We have one less continent on Earth. And all of the oceans and seas are warm enough to swim in, year-round (even Lake Superior, for my up-north Michigan friends).

No coats needed, or long pants. Every day is warm or hot. Sunburn proliferates, since we can’t put ice on it. No icing a muscle cramp either.

How do we find blue? We discover that the ocean is deep, and it’s cold down there. We’ll draw up that deep water and spread it around Earth, re-creating cold.

Brown

brown

Brown is soil. With no soil, nothing in nature grows. No grass. No flowers. (No weeds.) No trees.

With no plants, we’d have no strawberries, no blueberries, no other colorful fruits and vegetables. Animals would have to eat other animals almost exclusively. They couldn’t hide in the shade of those non-existent trees.

As with blue, we’d have to dig deep to find brown. A deep layer inside Earth would harbor soil, which is dirt down there. When exposed to sunlight and water, dirt would gain the nutrients it needs to become life-giving soil.

Gray

gray

Gray signifies old age. With perpetual youthfulness, we lose everything old age represents – wisdom, experience, long life, discernment, silence at times, patience, perseverance, deep knowledge about any subject.

We would have to learn by our mistakes, over and over, with no wisdom to teach or guide us.

If we survived long enough to see this, we’d discover, for example, that two vehicles colliding head-on frequently causes a fatal crash. So, we’re not going to drive like that, which increases our life span – and our experience and wisdom.

Gold

gold.png

Gold reveals wealth. If no one had wealth, then everyone would have the same standard of living. Wealth is a relative term, which needs poverty to define it. No wealth means no poverty. We all have the same bank accounts.

Which can’t last long, because a creative mind or two will find a way to increase wealth and productivity. Is money a finite resource that can’t expand when someone gains wealth? If so, wealth comes at the expense of people who then become poor.

Green

green

Green represents new growth, especially in springtime, or youth. With no green, we lose all that youth represents: inquisitiveness, energy, enthusiasm, willingness and ability to learn, a body and mind that are still developing.

We would be born “old,” like Adam, which means our values are set and difficult to change, also like Adam. We are already developed, never growing. We can’t handle a second career or move to a new town, because youth teaches us to be pliable, and that ability is gone.

We become experts in our field but can’t learn a new skill, since that requires growth. And we can’t handle change.

To find green, we discover we have ears. We can listen to what others say. By listening, we hear ideas we hadn’t heard before. That’s how we learn a new skill.

And that’s how we become young.

Orange

orange

Orange exudes warmth and happiness. Take those away, and we’re left with indifference and sorrow.

With no happiness, what is there to live for? Life expectancy will plummet. We find no pleasure in anything, only drudgery. Pleasurable things don’t even cross our mind.

To find happiness, we’d have to do something unintentionally that sparks enjoyment in us. A hug, perhaps. A high bowling score. A beautiful painting. A delicious meal.

Pink

pink

Pink reveals femininity. Imagine if there were nothing or no one feminine among us. We’d lose sensitivity to anything, deep feelings, romance, attention to detail, family life, beauty, knowledge of upcoming trials and possible trouble, inner strength, calm in the storm … love. So many things.

Please, God, bring back pink. Help us to see the beautiful strong soft side of life all around us.

Purple

purple

Purple shows off royalty – power, inheritance, lineage, wealth and status. With no royalty, there’s no inherited leadership. Our leaders would have to fight for prominence, since there’s no line of succession. We don’t elect power and status; we forcibly take them. At least, we think we do.

Those of us who are subjects can take them away. Perhaps we just won’t give power and status to a leader we don’t want to follow, and instead follow someone else.

Would we be better off without purple?

Red

red

Red means anger. Wouldn’t a life without anger be wonderful? No screaming at politicians, no teachers’ strikes, no sibling rivalries, no boss-employee charades … we would all get along with each other just fine.

For example, Democrats and Republicans would actually respect each other. They’d listen to each other and, surprise, solve problems.

We could treat each other honestly and respect the outcome, whatever it was.

A world without red, in this scenario, is a good thing.

White

white

White reveals honesty. With no honesty, we wouldn’t trust each other in our families, as drivers on the highway, in the classroom, in our politics or in our friendships. We’d break rules, then lie about it. Why not? Everyone is doing it.

To discover honesty, we’d have to realize that when we lie, we’re hurting ourselves as much as we are others. If I’m not honest with my wife, I can assume she’s not honest with me, if honesty doesn’t exist. What kind of a marriage is that? Either we trust each other or the marriage dies.

Honesty must win.

Yellow

yellow

Yellow represents brightness, sunshine. With no sun, only night remains. All is dark. We can’t see anything, as though we lived in a coal mine; our eyes are useless.

We depend on electricity 24 hours a day, seven days a week. When the electricity goes out – as it surely will on occasion – we can’t see our fingers in front of our faces. We must remain in place until someone fixes the electricity. Hopefully someone has a flashlight that works.

We’d better develop batteries that last a long time.

With no daytime, we’d be tempted to sleep in a lot later than we do now. Our productivity would fall. Our energy level would drop.

To find yellow, we’d have to find a way to let the sunshine penetrate the darkness enveloping Earth. We could invent a huge light that connects the ground with the atmosphere and beyond, providing a way for the sun’s light to connect with our light and make it permanent.