The Vanguard Total US Stock ETF (ticker VTI) was down just over 5% from December 31, 2013 through February 3, 2014. In other words, in just over a month’s time, the decline in US markets started to shake the confidence of some investors and the financial media. The proverbial “sky is falling” headlines were plentiful. Many predicted the markets to continue to plunge. So naturally, just like with most predictions, they didn’t come to fruition. Over the next ten days the market gained back the 5% it lost.
While the bad news was rampant, I didn’t hear one talking head, investment guru or financial analyst predict such a quick upturn. But there were many people who seemed confident they could explain it.
As investors, it is very important to focus on things you can control. And one of them is not listening to market seers. As a group, they are wrong more often than they are right and no one holds them accountable.
If there is anything to take away from this latest market gyration, I would say it is this – make sure you have an investment strategy in place that takes into account your unique ability, willingness and need to take risk. If you have truly gone through that process, you should be able to render the market’s daily ups and downs irrelevant and focus on what matters most to you.