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When the market is down, I purposely avoid looking at my retirement account. Over the past couple of weeks, my perception was that my balance was likely lower than it had been in years.
Today I logged in to take a look. Because I can view the history of my account, I was able to see that the value it sits at today is still higher (by a fair amount) than it was just a year ago. And yet my perception was that it would be far, far less than that.
I don’t know if it’s the generally pessimistic outlook I hold in my life that creates this illusion or not.
Kristine, that is a very perceptive perception.
I wasn’t going to check, but after reading this I took a look. According to Vanguard the one year performance of my 50-50 portfolio is 6.5%. While that’s down from what it was, it’s not anything to get excited about. The accompanying chart, ending in a cliff, however….
I’ve come to look at these market corrections as “stress tests” for investing. In real time, if you feel an overpowering urge to mass-sell your stock holdings at this point, your stock allocation is probably too heavy; if you feel an overpowering urge to mass buying, your stock allocation may be too light. If you just shrug your shoulders and say “meh”, or maybe want to tweak a little around the edges, then your stock/bond allocation is probably about right.
Experience is a great teacher…and a way to learn things that theory taught in the classroom can’t seem to match.
You’re experiencing a known human phenomenon! Large majority of people experience losses far more harshly than they experience equivalent gains.
SO you’ve been inundated with info about losses from the very recent all time highs in Feb (that cause you to experience strong emotions) and little info about how in context of the recent bull market it’s not that big of an event.
Even when we know it’s happening, it’s hard to resist.
Thank you for this thoughtful comment–it’s so true!
Just today I’ve seen a few articles say a market correction was quite possible (even overdue) in 2025. The tariff situation may have just been the trigger to start it. But, of course, any number of other unpredictable events could have started a correction as well. Or maybe such a correction wouldn’t have happened for another five years. We’ll really never know.