#TBT 2006 Newsletter Volume 49
Eleven years ago, Nancy was helping her daughter plan her wedding. This year, the baton has been passed to Jackie as she helps her daughter plan hers. Weddings and the stock market are two places where jitters are common, and in today's throwback, Nancy reminds us that there is an appropriate way to manage these jitters.
We're counting down to the wedding. My daughter's nuptials are in November, so we have plenty of things to do to prepare for the big day.
"H" is not a great planner. She's a great person, a wonderful daughter, but not a good planner. A couple of nights ago, she had a meltdown as she looked at her long list. Panic set in at the sight of all the things which had not been done.
I resisted the urge to lecture and nag. Instead, I tried to point out her accomplishments and outline a plan for the things left undone. No, she didn't have her guest list finalized, but she had a working list. No, she hadn't ordered the bridesmaids' dresses, but she had her dress. No, she had not confirmed the musicians, but she had picked out the music.
A little bit of nerves, when it comes to wedding planning, is a good thing. I want her to have some sense of urgency without going into full-blown panic.
As Mother of the Bride, I think my job is to keep her on course and keep her calm. Oh, yeah, there's one thing I have to provide... CASH, lots and lots of cash!
Investors have been nervous lately. Our new Fed chief uttered the "I" word (inflation), and Wall Street had a meltdown. Markets fell, erasing the year's gains.
As I watched on negative day after another, I tried to decipher the underlying numbers. Was this an overall slowdown, or was this a short-term overreaction?
Signs pointed to the latter. Yes, interest rates will go up, but, no, they are not high enough to really dampen activity. Yes, the housing market is cooler, but, no, it's not tanking. Yes, prices at the pump are painfully high. No, they are not intolerable.
Our growth pattern may be slowing, but we're still on course. After a few down weeks, we suddenly had a couple of record-setting days. Of course, this was after Mr. Bernanke said "never mind" on inflation!
It reminded me that being a little nervous when investing in stocks is a good thing. It keeps you from taking undue risk. But, when the true Nervous Nellies are heading for the door, that's when good investors stay calm and stay the course. And if you're lucky enough to have CASH, it's the time to go on a buying spree.
--Nancy's New Perspectives Newsletter, Volume 49, July, August 2003