Well, how are you doing? I mean, how are you doing financially? How are your nerves? Are you sleeping at night … or are you worrying about trying to find a second job? Or perhaps, you’re just trying to keep your primary job?
We’re hearing a lot lately about the state of the economy, the inherent dangers of the bailout by the government for banks and other institutions. To top it all off, we’re in the midst of an election year, never a time of certainty to begin with.
You may be sitting down with fear and trembling to see how your 401k plan is doing, or you may be looking at your brokerage statement a bit closer this month to see if the value of your portfolio has gone down so much that you are going to cry.
I know some people who refuse to do either of these things, choosing instead to disregard their portfolio balances, much as an ostrich would bury its head in the sand to avoid the harsh realities around it. Never before has the coping behavior of an ostrich been so duplicated as in the last few weeks and months. “What’s the point of looking?” I’ve heard people say. “It will only depress me, and there’s nothing I can do about it anyway.”
This coping mechanism rears its head in other arenas of life too. The woman who finds a lump on her breast refuses to go to the doctor to have it analyzed. Instead, she figures it will go away. The relationship going south is not attended to because everyone knows relationships get better when they are ignored.
I’m obviously being sarcastic. The truth is: facing your demons and your obstacles is the surest way to begin to overcome them.
And in the stock market and investing world, a reality check can be the healthiest thing you can do. Why? Because it is better to know where you stand, so that you can first weep and wail and bemoan your existence, and then move forward to plan and adjust and get on with the cure. As painful as the exposure to your losses may be, refusing to see what’s what can be even worse.
So … suck it up! Take a deep breath, a cleansing breath, and then pick up that bank statement, check out that brokerage accounting of your portfolio. If you’re like most of the people around you, you will have suffered some losses. Depending on the kinds of stocks or other investments that you’re in, the losses can be single digit or even double.
Once you assess the damages, perhaps write it down. Seeing it on paper right before your eyes can help clarify your situation: “I am down 12% on my stocks.” There, you’ve said it. (Say it out loud.) Don’t start by trying to assess blame: a broker, your boyfriend, a magazine article that led you astray. Instead, be prepared to move forward starting today with a new plan.
If you are in good, solid equities, companies that are the staple of the United States economy, you might want to sit tight and do nothing. Statistics prove that these companies — and their stock prices — will most likely come back. So if your losses are only on paper and you can live with this reality, just file your documents away and get on with your life, making a mental note to check back from time to time on how those stocks are doing.
If you can’t do this because it’s making you crazy, then think about selling at a loss and going to cash. You will have a nice tax write off (always look at the glass as half full rather than half empty), no capital gains to pay, and now you’ve got cash, which, unless the world does collapse, is safe. Find a safe haven for your cash: a money market, a short-term CD, and make a mental note to check up on the market regularly so that when it does start to go back up, you can buy some good stocks at a lower price. Think of it as waiting for Macy’s to have a storewide sale and you’ve got cash to buy a few outfits and some new shoes because you have money in the bank.
And remember, when all else fails, the old adage that “things could be worse.” If you still have a roof over your head, food on the table, friends and family to support and love you, you’re way ahead of most of the rest of the world. So just consider it a sea change in your life that you need to adjust to … and get going on making plans for the future.