Back in the depression there was Black Thursdays, Black Tuesdays and Black Wednesday, but last week was basically an overall a black and blue week. I’ve never seen so many people panic in my life and get anxious about what’s going on in the stock markets since I was in the business since 1991.
One of the things that I’ll tell you is that they say that intellectual quotient or your I.Q. is important, but I think what’s more important in these times is your E.Q or your emotional intelligence. This is the ability to be self-aware about what’s going on so that you can self-manage your overall decisions.
One of the things that I’ll tell is the study we saw a long time ago, where they looked at people in a random group sample flipping a coin. They asked the group to flip a coin 100 times and record heads or tails. Then, they asked the group right after to flip the coin using their imagination in their head, and also record heads or tails. What they found is that the imagination recorded far greater strings of consecutive heads or consecutive tails than the actual coin flipping. It only goes to stand that one of the most powerful things in this world is our imagination.
I think we’re in one of those times now where it is important to have a steady hand at the rudder. Can you remember just a few months ago when the media had gas going to $5 or $6 a gallon, and in Atlanta people were waiting in line for an hour to get gas. Now, just a few months later you don’t hear anybody talking about gas at all. The media has heavy influence to trigger your imagination.
You investing truly goes back to your time horizon to your goals which are really important to revisit now. If you need the money over the next several years, it is likely you don’t belong in the stock market at all. If your time horizon is ten plus years, then I would view this as a great buying opportunity, not a time to put your money under your mattress or stop 401(k) contributions.
I do think the one thing that should come out of this is knowing what you make and what you spend because saving is still one of truly key elements to building wealth. To do this as the CEO of your family finances, now is the time to get with a private CFO™ to understand your balance sheet, income statement, and your bottom line. I’m pretty sure they won’t do that for you on CNBC!