October 2019: End of Quarter Review

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“Optimism is Pessimism about the dangers of Pessimism” -Tyler Cowen

I recorded this month’s video on Monday September 30th, the last day of the quarter.  Not only do I give a recap of what happened in the 3rd quarter, but I also reference my previous two newsletters about volatility (below average volatile year) and politics not mixing well with investments.  The last time we had a constitutional crises was the impeachment of President Clinton, and the unmanaged stock market indexes were up 28%.

And I reference the importance of keeping your emotions in check, and asking yourself “does my optimism or pessimism help or hurt me?”

The reason I am so specific regarding when I recorded the video is because it was the afternoon before a two-day 800 point decline in the unmanaged stock market index Dow Jones Industrial.  This made the national news.

No one likes to sound like Baghdad Bob, so I considered re-recording the video. Wisely, I chose to let the video stand.

I was letting myself fall into the “recency bias” in my decision making, which is weighing more recent data heavier than the data as a whole.

The economy and stock markets are very complex, with many variables and inputs.  A few reports and days mean very little in the big picture or over the long run and it’s so easy to let yourself be sucked into the pessimism of one data point or another.  We can’t extrapolate good days and assume they’ll all be good, and the same for negative ones.  But, this is so easy to do, and we must resist it to be long term successful!

I’ve been meeting with clients for over 28 years; this past week was a good reminder that I’m human too. I’m glad my experience allowed me to acknowledge the feelings I had but not be controlled by them.

I stand by my video, and ask “are your emotions helping or hurting you?”.