Market go down. Market go up.
We’ve seen this kind of two-day volatility before, dozens or maybe hundreds of times for the gray-haired among us. But this go-round does feel a bit different in the wake of a political earthquake.
And that’s fine. Markets are indeed about the feels — what humans or the trading robots they have programmed believe will happen to companies next. And big surprises that augur unpredictable change fire circuits in the brain.
So by all means, do something. But that something isn’t necessarily buying or selling stocks. Instead, remind yourself that you are a person of above average reserve and emotional intelligence as you consider the following points.
Unpredictability can compound when politics cause stocks to gyrate.
It’s nearly impossible to consistently predict how individual stocks or the overall market will perform in the short or medium term. That’s why so many people invest in index funds, dropping bits of money in at regular intervals and leaving it there for decades.
For those who don’t invest that way, ask yourself this: Is this the moment to see whether you are some kind of market seer? Did you predict that President Trump would win in 2016? Win again in 2024? Does the “gridlock is good for the markets” thesis going around this week make sense to you — or actually defy logic? And do any of us have any earthly idea how Mr. Trump might behave now, if we ever did?
It’s hard to forecast markets. It’s difficult to game out politics. Put the two together, and it’s an advertisement for ceasing any guesswork, holding all stocks and keeping them for the long term, come what may.
You are a labor market of one. Assess your risk.
How much money did you earn in the past 12 months? And how much money did your portfolio throw off?
If you’re not retired or otherwise out of the work force, that first number is probably higher than the second one. That makes your income at least as important as your investments in any short-term personal risk assessment.
There are times when the warning signs on employability are as plain as day. This week, News Corp’s chief executive, Robert Thomson, gleefully discussed how artificial intelligence offers “so many more choices in reading voices” for HarperCollins’s audiobooks. Audiobook narrators — and I’ve been one twice at Harper — should keep an eye on this, even as the publisher’s chief executive has said that it remains committed to live human beings.
Listen for how other executives talk in public, and ask questions in your own industry that might yield indications of your own personal risk and the advisability of a career pivot.
And if your income is at risk, there is no shame in wanting to sell some stock to put your portfolio on more stable footing or contribute to an emergency fund.
Big life events can creep up on you.
Let big events in the world — a change in power in Washington, the imposition of tariffs, a war, zillions of dollars flowing to artificial intelligence — be a trigger to look at the big events on your own short- to medium-term calendar.
My younger daughter just started middle school. There’s a pretty good chance she’ll go to college in seven years.
As someone who needed a lot of financial aid, I can’t bear the thought of her savings being at risk. Earlier this year, with A.I. driving so much of the stock market and having seen excellent returns over a decade, my wife and I dialed back the equities portion of our 529 account by 20 percentage points.
This is not a recommendation, and it wasn’t an attempt to time the market. It was deeply personal — a measured attempt to reduce anxiety now with the sober knowledge that there could be a large cost in dollars if stocks have many more great years.
You’re probably also playing a really long game.
On Thursday night, after a bad day in the stock market, Mr. Trump logged on to social media and blamed “Dumocrats” for having brought losses to Americans’ 401(k)s. This is pretty rich from a guy whose tariff adventures have sent markets on many single-day benders in his second term.
But to even discuss his market commentary risks a kind of counterproductive short-termism. Your price is not yesterday’s closing price or today’s or the day after Election Day in 2028.
Your price is day one of the kid going to college, or the moment seven years from now when you want your down payment fund to hit the magic number you’ve set, or the day before your retirement or the day after you die and an outsize bequest stuns the development director of some deserving institution.
As ever, there is no guarantee that the stock market will get you there or that the labor market will allow you to save regularly. But if you tune out short-term noise, you’ll probably feel better on the path to that day.
The post The Markets Are on a Yo-Yo. You Don’t Have to Be. appeared first on New York Times.
