Is bad news contagious?
Today, as I record this episode, the Dow Jones Industrial Average is down several hundred points based on more reported cases of the Coronavirus.
Not to make light of a serious situation, this is just the latest crisis du jour.
We have a U.S. Presidential election later this year. Imagine how crazy things might get between now and then.
And in the past, we’ve experienced acts of terrorism, wars, different Presidents, new legislation, and more.
Despite all this, the market has managed to climb to new highs.
And I believe that owning a diversified portfolio of stocks and high-quality bonds is still one of the best ways to build wealth for your future.
So, what are we all supposed to do in the face of scary headlines? What do we do when this feels different than anything we’ve experienced before?
Yes, it seems bad news is contagious. But there’s an antidote…
It’s simple really… just focus on the things within your control.
Listen to this episode to learn more about why I think this is important. And why it may be the best strategy for coping with the news and current events that seem to have everyone freaking out.
Click here to subscribe in your favorite podcast app.
- Seven Stages of Money Maturity
- George Kinder’s book covers investor psychology and how emotions can cloud judgment on pages 143-146
- The Normal
- from Twitter friend and fellow advisor, Preston McSwain
- and be sure check out the related reading below his article for more
- Gradual Improvements Redux
- Includes this great chart with a reminder of all we’ve dealt with since March 2009
- Stock Market on Sale
- Is This Different?
Thanks for listening.
Please subscribe and share with your friends, family and coworkers.
Hello and welcome to another episode of women’s retirement radio, where we will continue to discuss retirement issues that are impactful to women their families, as they think about the next chapter in their lives.
Before we get started today, I wanted to give a quick shout out to my buddy, Rick, he is a
colleague, a friend, a fellow financial advisor, out in Idaho and he sent an email which made me laugh he said that instead of calling it the women’s retirement Radio Podcast, he really wants me to call it the women’s key retirement podcast. Just so he can say he’s listening to Wk Rp. And for those of you that are not too young to remember, if we do indeed change it to Wk RP in the future, we’ll have to figure out how to recreate the famous turkey drop episode featuring les nessman and Then the rest of the Wk RP crew. So don’t hold your breath. But I’ll keep you posted on that and thanks for the thanks for the thought Rick. Today I want to cover current events. And the subtitle for today’s episode might be bad news is highly infectious. whether you want to or not, given today’s 24 hour news cycle, and stations like CNN and Fox News and the internet and email newsletters and social media like Facebook, it’s near impossible not to pay attention to what’s going on in the world around us, for better or for worse. And as I’m recording this, it’s a rainy Monday morning in Atlanta, and the current crisis does your, if you will is the coronavirus. In fact, the Dow Jones Industrial Average opened up Several hundred points down this morning based on new reported cases of the corona virus around the world. And I don’t frankly know enough to substantiate the severity of the corona virus infection that does seem to be spreading. I have read multiple reports that say that just regular influenza, which you know, many of us seem to deal with seasonally, has has and continues to kill for more people than coronavirus has even come close to so I don’t know if that puts things in perspective. And I’m certainly not trying to make light of what sounds like a very serious issue that I hope is dealt with, quickly, efficiently and thoroughly. But I did want to use this as an example of how our decisions and our emotions can be manipulated by Current Events news. And typically it seems to be the bad news, which seems to spread the quickest and have the most significant impact on our financial planning and our financial decision making. And so currently we’re talking about the coronavirus later this year in the US we have the presidential election. And depending on which side of the aisle you categorize yourself or who your preferred candidate is, you know, things you’re just going to get, I suspect a little bit crazier and more circus like as the past few presidential elections have seemed to become. So we have that to look forward to. And I’m sure that’s going to dominate the news headlines and the news cycle more and more in the coming weeks and months ahead. And I could probably ask you to think back in the not too distant future about other issues. Going back to something as horrific as 911 I was actually at work. I was working for Merrill Lynch at the time, but I was at work when when I learned of what had happened in New York, and in the other sites that were impacted that day. And the market shut down the next day. And believe stayed closed for a couple of days before reopening. And while that was a tragedy beyond words, the markets our financial institutions have, for lack of a better term largely recovered. And life if life goes on
the farther back you know, we’ve gone through wars. We’ve gone through other terrorism, acts of terrorism around the world, we have global issues, both economic, political, we deal with legislative changes all the time. Most recently we’re we’re dealing with continuing to interpret the ramifications of the secure act, and what that’s going to mean for each of our retirement and retirement planning decisions. So all this to say what’s what’s the takeaway? What can you do? I mean, how, if bad news is highly infectious, what can you do to immunize yourself to protect yourself from the from the ability for bad news to travel quickly and to sink deeply into perhaps affect our emotions in a way where we make decisions that might frankly not be in our best interest, certainly over the long term. term but maybe not even short term. And I believe strongly The best thing we can do is to focus on what you can control. Let me repeat that. Focus on what you can control. Now, immediately you might be saying, Well, you know, I, you know, if you’re thinking about a presidential election, every vote counts I have influenced there. And yes, you do. And I’m certainly not suggesting that you don’t get out and vote in every election, whether that’s national or local. But despite the little bit of influence that you may exert in an election, you don’t control it. With a infectious disease like Corona virus, there are certainly steps you can take to protect yourself into minimize your chances of becoming infected, but it The end of the day, there are a lot of other people involved. That could be carriers or that could unwittingly infect you. without your knowledge, or despite your having done everything you can to protect yourself. Let’s say, let’s say one of the presidential candidates that is currently running gets elected in November. And they are running on, among other things, a platform of raising taxes, especially on the rich, but even the middle class. Well, if your income taxes go up, what are you going to do? Are you going to stop working or are you going to work less so you pay less taxes? I don’t know about you, but my life’s gonna go on. I’m not going to quit working. I’m not sure that I work a lot harder. But, you know, ultimately, I’m not really going to change my routine because while I may or may not like changes in time axes or things that I see going on around me, locally or globally. There’s only so much I can control. And further, I think it’s also important to think about how you control your reactions to things like news or current events or whatever may be going on around you. Because when you kind of step back and think about the things that you can actually control, it actually helps to kind of shrink your world down a little bit and in my view makes things a little bit more manageable and a little bit easier to digest and cope with on a day to day basis. For example, when I started as a financial advisor years and years ago, 27 years ago, I subscribed to the Wall Street Journal, I subscribe to Investor’s Business Daily. I read every bit of news that I could get my hands on, because at the time, I felt that it made me better informed. And if I was better informed, then I could be better equipped to discuss things with clients and to ultimately give them better advice. Now, to be clear, this was back in 1993. This was pre cellphone, pre internet, pre 24 hour news cycle. And clearly lots changed. But not that long after I quickly realized I quickly came to the conclusion that staying up with the news is
perhaps an interesting way to pass the time but frankly, reading about something that’s already happened does not, in my opinion, put me in a better position to make decisions today because at the end of the day, I still don’t know what’s going to happen tomorrow or next week or next month or next year. And in neither to you so if you if If you want to be better informed if you want to read the news, by all means, knock yourself out. I hope you enjoy it more than I ever did. Today, I don’t subscribe to The Wall Street Journal or Investor’s Business Daily or any other news periodicals. I stay up with what’s going on in the world just through conversations with friends and family and clients and colleagues. And I, frankly have more than enough to occupy my time and attention. But most of the news that I read, it’s just it’s not something that makes me happy. There’s not a lot of positive news coverage. It’s out there if you look for it, but frankly, bad news sells in the media. industry is really out to sell advertisers. So advertising dollars and the way they sell advertising dollars just to get more eyeballs looking at their media, whether that’s in print or TV or internet or all the above. And, sadly, bad news. negative news seems to do that better than positive news. So I’m not suggesting that you eliminate news from your life. But I would certainly encourage you to try out a news and information diet, go on a break, take a few days or a few weeks off and see what happens. And I think you’ll find that you’ll still be able to carry on intelligent conversations with people and you’ll still be able to operate and live your daily life just as you do now. So bringing this full circle, what’s the point? Well, right now we’re dealing with Corona virus, and hopefully that will be a thing of the past very soon. Hopefully it’ll be addressed and no longer a threat or a concern. But regardless of when this is addressed in no longer a headline news no longer a threat that we’re hearing about and reading about. There’s always going to be something else. And whether that’s the presidential election later this year, whether that’s something that frankly, we’ve never experienced before, that we can’t even imagine today, there are things that you know, can and will continue to happen. And it’s up to you. It’s up to me to decide how we’re going to react to that information react to that news. And as it relates to your retirement planning and financial planning, it really boils down to how are you going to let that news, impact your decisions and your retirement planning and your financial planning. And it’s easy for me to say it shouldn’t it shouldn’t impact your financial planning at all. But frankly, we’re all humans that were emotional animals and so it’s natural for us to have sometimes irrational reactions to bad news. And it could be bad news within your family or within your social circle. Or it could be something on a global on a global scale or something in between. But I would encourage you next time you’re reading or hearing about something that just seems dire that seems like this is earth shattering like we’ve never experienced anything like this before. While maybe we haven’t specifically experienced something like the corona virus in the past, we’ve gone through, as I mentioned earlier, acts of terrorism, wars, different presidents, both Republican and Democratic, different congresses. And just an untold number of other events, some good some bad and that’s frankly not going to change but rather than to dwell on something that you really can’t control, I would encourage you to instead think about what you can control. And when it comes to your money. The list isn’t that long. You can control your cash flow, how much you’re saving versus spending, and whether you’re working or in retirement. There’s still always the element of cash flow, how much is coming in versus how much is going out to support your lifestyle and your expenses. So cash flow is one time, time or timing is number two. So you can control
to a large extent you can control when things happen, like when do you retire? And if you work a year or two longer, what does that afford you if you retire a year or two sooner? What does that cost you? What what offset what offsets or trade off Do you need to make to make that happen? There’s also timing as it relates to events. Do you want to plan to replace Your automobile every five years versus every 10 years? Or let’s say that you plan to retire. But do you plan to do some part time consulting? For a period of time? Well, do you plan to do that for three years or for seven years? And so the time and the timing or the duration of different goals and events in your life, is something that most of the time that you can control or certainly exert a large amount of influence over. And finally, risk and risk is not limited to just your investments. It’s also limited to how much cash Do you keep on hand versus how much do you rely on credit card and other debt? Certainly, there’s risk as it relates to your investment portfolio and that’s something that you can control based on how much you have in the stock market, versus how much you diversify using other asset classes like cash or high quality fixed income. There’s risks around you know, do you vacation, in the southwest of the United States, or do you travel to a more exotic, more adventurous location that involves different modes of travel that could, frankly, introduce a little bit more risk to your life and your lifestyle. I’m not here to prescribe the right way to do this because frankly, that’s up to you and you know what’s best for you in your life. And that’s really the purpose of personal financial planning and personal retirement planning is to come up with a plan that reflects who you are and what’s important to you and those you care about. But as you go through the day, and through the week in the month in the remaining remainder of this year and years to come. give some thought to focusing on what you can control and attempting and I admit this is easier said than done in many cases, but attempting to ignore things Things that are outside of your control if you can’t ignore them. Be conscious of how you react to them. Be conscious of how you respond, how you react, because that goes a long way to influencing how you’ll ultimately take action or not. And so again, right now, it’s the coronavirus right now we’re dealing with a presidential election in the US later this year. We’ve dealt with other crises like this in the past, we will certainly deal with them again in the future. And there’s no easy answer. There’s no simple way to prescribe the right course of action because it’s frankly, it’s going to depend but I do think that there is a lot of value in taking a step back, focusing On the things that you control, you directly control and doing your best to ignore everything else. Frankly, I find that makes what has already become a pretty hectic and crazy life. I found that that makes things a little more simple, a little easier to cope with and deal with on a day to day basis. And I’ve yet to encounter anyone that does not want to make their lives a little easier and a little more simple. So with that, thanks for joining me and I look forward to catching up with you on the next episode of women’s retirement radio. Hey, it’s Russ again. Before I go, I need to share some disclosure information with you. You should consult a financial advisor familiar with the specific circumstances of your unique financial situation before making any financial decisions. Nothing in this broadcast constitutes a solicitation for the sale or Purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature, and are not a guarantee of future returns. I’m a financial advisor, a certified divorce financial analyst and an investment advisor representative of wealth care Capital Management LLC, an SEC registered investment advisor based in Richmond, Virginia. The views discussed in this podcast are my own and may not be consistent with or represent those of wealth care, capital management.