Should You Worry About Terrorism Before You Invest?

You may remember that following the 9/11 attacks, the stock market closed for respective days. It re-opened on 9/17 with the Dow down 7%.

That was it for one couple I know, Virgin Mary and Frank. The attack on the country, coupled with the attack on their personal finances, was too much. They were worried terrorism would drop our economic system and stock market like the Titanic, so they sold all their market investments.

Was it the right move?

Nope. In less than two months, the state of affairs changed drastically: Within 53 days, the market recovered all it had lost. And by the end of the year, the market was 12% higher than it had been when Virgin Mary and Frank had bailed out. Now their top problem was not having a strategy to get back in. In their uncertainness and confusion, they became paralyzed by fearfulness of making the incorrect move again.

You’re well aware that September 2001 was not the first clip the U.S. weathered calamity that directly impacted investors. Among other events, we’ve been through a depression, World War II, the Cuban missile crisis and an assassinated president.

Yet the stock market have continued to thrive.

Despite market resilience, a batch of people lost a batch of money. It might be alluring to believe that if investors had been more than informed about what was happening geopolitically, they could have got headed off personal financial devastation. But that’s A chump punch. Now that we can be acutely aware of every bend and turn in the world, makes it do sense to put based on international political and military posturing? Not if you desire to do money.

Here’s another example. Shell-shocked, Janice met with her financial advisor in March of 2003. She’d seen the market army tank through the hideous bear market from 2000 through 2002. She’d read sordid narratives of corporate theft that cost investors millions and, in many cases, their retirement. She was worried by accounting scandals. And, of course, there was this problem in Iraq.

Janice was convinced that any 1 of these events could intend catastrophe for her investments. In her mind, all of these things happening at the same clip meant certain financial catastrophe. Demoralized, Janice sold all her holdings. And from an emotional standpoint, you couldn’t incrimination her.

But from March of 2003 through the end of 2003 the Dow rose 32%. Janice missed out completely.

Our market have survived everything thrown at it. Unfortunately, we’ll most likely always have got a crisis to overcome. The current terrorist problem could be with us for many years, and that’s certainly a human tragedy. However, no 1 can revoke the business cycle. There will always be companies that do great merchandises and high profits. Those companies will expand, and the value of those companies will grow. If you have shares in those companies, your wealthiness will expand.

Even though the human race can be a scary place, history uncovers that calamities end up as just blips on the investment microwave radar screen. Political and military catastrophes have got never dealt a death blow to our financial markets. In fact, the longest clip they ever took for recovery from a military attack was nine months, back in 1941 after Pearl Harbor.

People lose money in tough modern times when they don’t have got a coherent, predetermined strategy for entry to and issue from the market. If you desire to turn your assets safely, disregard military and political events. Establish a program for purchasing and merchandising based on what the market states you, not the nightly news. Then allow that program order your determinations rather than be swayed by your emotions, which will be understandably strong in modern times of stress. But if you desire to endure any storm, you must remain the course.

In sum, listen to the market, not the mass media reports. Develop what I name a “safety-net strategy,” where the impact of human race events is diminished, yet those events never order your strategy. Such a strategy assesses existent instead of perceived hazards in the market. In future columns, I’ll be sharing what those existent hazards are and how to make a safety-net strategy that volition give you safe seaport in any economical climate.