• Matt Morizio

Was a nearly 20% decline in the S&P 500 enough for you to make a move?

Updated: Jan 28

In Q4 of 2018, the S&P dipped nearly 20% from its highest to lowest point. But if you're one of the people waiting for "the next crash" before you invest, I'm willing to bet you're still waiting on the sidelines.


Emotions and money don’t mix, (I give this advice to athletes in this podcast) and if you turn on the news for guidance, you'll find yourself pouring a stiff drink to calm your down. The news is full of doom and gloom.

I remember a conversation I had with a friend in February of 2017. At the time, Trump was recently elected. He was afraid that Trump’s election would lead to another depression. And I understand why - media outlets were going crazy talking about the impending crash.

“I don’t know what’s going to happen, but I’m keeping my money out of the market to see how this whole thing plays out…When the market crashes I’ll go in.”

It played out pretty well in 2017, just not for him. The market returned over 20%.

But he told me he was “in” if the market crashed…

So when the market dipped nearly 20% in Q4 2018, and December was the worst December since The Great Depression, he must have seized the opportunity, right??

Wrong. He didn’t buy in.

Emotions don’t work that way. How could an emotional person decide, amidst all the doom and gloom, that was the right time to buy? The news went crazy in Q4 about the long standing bull run finally ending. You couldn’t go anywhere without hearing or reading about the impending armageddon.

But turn on the nightly news today. You won’t hear about the market’s steady 12(ish)% climb so far this year.

Drama sells ratings. “School bus crashes,” sells ratings. “School bus brings children to school safely,” doesn’t sell

But here’s what I know about people. Pessimists stay pessimistic, and optimists stay optimistic. During a downturn, pessimists say, “The market hasn’t crashed enough yet.” And optimists say, “I’m buying stocks on sale. This will turn around any day.”

The people who were all-in in February 2017 were the same people who doubled down and invested more in December 2018. And the people who were on the sidelines in 2017 are still on the sidelines today.

If you’re hesitant about investing in the market, I encourage you to explore how you approach other parts of your life. Are you typically a glass half-full or half-empty kind of person? The answer may explain why you struggle with investing.

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Investment advice offered through Beck Bode, LLC, a fee-only Registered Investment Advisor in the Greater Boston area.