Wishing And Worrying About The Stock Market: A Waste Of Time
In previous times, we read the guts of chickens. Nowadays, we all ‘see’ the future in the movements of the stock market. It is probably no more scientific than gazing at a chicken stomach. Damien Smith writes at Ninemsn Money about why worrying about the state of the stock market is a waste of time. Here are some insights.
Stock Market Vs Economy
Ah, Mr. Ross Gittins. A voice of sanity in the crazy world of financial predictions. He wrote recently that it was the bane of his working life that people “imagine the state of the share market to be far more important than it is in the workings of the economy”. The economy and the share market is not the same thing. Remember the week before last, when the stock market took a rather big tumble? Ignoring the fact that it basically recovered all its ground a couple of days later, no commensurate dives in the Australian occurred.
Held In Sway
Another pretty clever gent, known in some parts as a bit of a dab hand at the whole investment business, Warren Buffett suggests that we can watch the stock market, and respond to it, but as soon as we fall under the influence of the market, we are heading down a stiff spiral. Knee jerk reactions to the market can often have effects that far exceed the initial event. In other words, economies are, in a large part, emotional things. They go up, they go down and euphoria or panic is a contagious disease. When you sift through the emotional response, often you will find the event that sparked it wasn’t all that disastrous. The key here is to keep a level head- don’t overreact. Buffett also suggests that you should never buy anything you would be unhappy to hold on to, should the share market close down for ten years.
The Oracle
There is no one on this earth who can accurately predict what might happen on the stock market. If there were, we would all instantaneously follow their advice and probably end up defeating the whole system. As it is, investing in shares will remain a risk, though there are ways to reduce your expenditure. So what can you count upon as an oracle? Simple truths that won’t change. Paying down debt is important. Using credit cards with restraint is crucial. Maintaining a lifetime saving strategy will stand you in good stead. These strategies will not fail you- we all know it, now all we have to do is implement them into our own lives. So, instead of spending time reading every piece of investment advice, why not start setting up these three pillars into your life?
Apocalypse Averted
The financial doomsday cult has been busy these past couple of years and, especially, these last couple of months. I am no financial expert, I have no idea where or how the share market will move in the next couple of years. All I know is that there are a couple of steps I can take to ride out the storm, should it come. Overexposing myself financially would mean I would have to take less beneficial financial steps should something go wrong- either with shares or a huge mortgage. Flexibility, low levels of debt, an emergency fund and diversified assets- they’re all in my first aid kit so should anything change, I can bunker down til things head upwards again.
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