The Bottom Line
By Chad Wilson
June 30, 2008
Foundation Bank --
The Bottom Line
Can you Control Yourself?
Volume IV Issue VI – Monday June 30, 2008
A monthly newsletter of financial commentary for our friends
It has been a rough 12 months in the stock market any way that you slice it. Pessimism is rampant. I think there is a good explanation for the flood of negativity on people’s attitudes about the economy. It has been a long time since we had an economic correction that every single person in the country felt. However this time, we have a double-barreled set of circumstances that are contributing to people feeling rotten about the state of the economy. The first is the cost of fuel. We all feel it every week or so. The second is the slumping housing market. Many of you readers have houses right now that have been sitting on the market for some time. So all of us feel one or both of those challenges – every single person in America. That is contrasted from corrections in the past that affected only investors, or professionals, or Wall-Street traders. So we’ve got a list of suggestions on how to cope with our present circumstances:
1. Study the past. We have been through significant economic challenges in the past. With every challenge comes the statement, “This time is different.” To some extent that is always true. Corrections are rarely textbook in their behavior. However, without exception, the stock market and the economy as a whole have always rebounded. You can look back to a host of hurdles in the past that our economy has been able to leap.
2. Be patient. This is one of the hardest things for us to do. We are impatient by nature. But it is very important for us to realize that impatience in financial matters will always cost you. We must realign our perspective to look past the tumultuous headlines of today where there is light on the horizon.
3. Look at your budget. When food and fuel costs are going up it is more important than ever to revise your budget (or to start one if you don’t have it). I can’t emphasize how important this is. Even if you have substantial income, you are allowing your money to
control you rather that the other way around if you don’t tell your money what to do through a budget.
4. Reassess your priorities. Have you made money a higher priority than it should be? How about your work? What about the importance of your family. A difficult economy has a knack for exposing what we value most. We may find that we love work or money more than we should.
5. Read the Bible. We believe that the Bible is the greatest collection of truth and wisdom ever written. One of the subjects it addresses most is the topic of money. Proverbs is a good place to start.
I have good news. If you study the past, things tend to get better when everyone is negative. That has historically been a signal that things will turn sooner rather than later. There is an old saying that the market loves to climb a wall of worry. Now, we are not calling a bottom. We learned long ago that predictions get you in trouble. But we can say that if history repeats itself, things will eventually improve. In the meantime take a look at the five suggestions above. The most successful investors know that over half the battle is not learning to control the market. It is learning to control our own reaction to the market.
Chad P. Wilson, CFP
Foundation Bank – a division of McKenzie Banking Company - 731-554-2423
The above is strictly informational commentary and does not constitute any sort of recommendation. Please consult your own financial advisor for specific tax, loan, or other investment advice.
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