By Desmond R. HenryCERTIFIED FINANCIAL PLANNER™
I bet you didn’t know February 18th is National Battery Day! I know what you’re thinking…how is this going to make me a better investor?
1.) Batteries have short life spans… and so do market corrections like the one we are in! The average life span of an AA battery is only about 20 hours. Research shows that the average stock market correction has a relatively short life span as well- only lasting about 88 trading days, or just a little bit over 4 months. While stock market corrections are an inevitable part of ownership, they last for a shorter period of time and should only matter if you’re a short-term trader (not a long term investor).
2.) No battery lasts forever…and the same is true for positive runs in the stock market! One inevitable truth is that all batteries, including rechargables will eventually die. Market corrections are an inevitable part of stock ownership, and there's nothing you can do as an individual investor to stop a correction from occurring.
3.) Preserve your battery (investor) life! We all know that one way to preserve your battery life is by turning off the device itself. Perhaps, that’s not bad advice to follow as investors during tough market times. What I mean by this is that you should turn off the very devices that we use batteries to charge (iPhones, computers, & our remote control). All these devices are often sources of negative media which can be draining on your investor energy! After all, research shows that investors who more frequently monitor their portfolios are more likely to observe a loss and make short-sighted bad decisions.
4.) Don’t throw out the expired batteries! Unlike milk, the expiration date on a box of batteries doesn’t mean they need to be tossed. The batteries may start losing some efficiency by the time an expiration date arrives, but it still has a lot of life. Doomsdayers will tell you this market is expired just like they do every year however I prefer to listen to famous investor, John Templeton “The four most dangerous words in investing are; ‘this time is different.” Since 1926, the S&P 500 has finished positive 65 calendar years or 75% of the time. Now you wouldn’t throw away a battery with 75% life expectancy, would you?
I hope these tips help you to stay charged (and invested) during these tough market times!
About The Author: Desmond Henry is a financial advisor with U.S. Bancorp Investments, Inc. in Topeka, KS. Desmond holds one of the most distinguished designations in the financial industry as a CERTIFIED FINANCIAL PLANNER™ and has been recognized as one of Topeka’s “Top 20 Business Leaders Under 40.” He has more than a decade of experience in the financial industry and received his graduate certificate in Personal Financial Planning from Kansas State University.