“The market can stay irrational longer than you can stay solvent.”
-not John Maynard Keynes, probably
People have been predicting the next recession for at least the last eight years, and this past week those people got another 15 minutes in the spotlight. The Dow dropped nearly 1400 points on Wednesday and Thursday, shedding over 5% of its value. This is the biggest two-day market drop since March, and while it rallied for a bit on Friday, there were still plenty of folks hawking their predictions that this is the beginning of the end.
I’m not going to go into all the reasons that get thrown around for the market being overvalued, or the student loan bubble being unsustainable, or whatever else is the currently fashionable reason to not invest. Frankly, they bore me. To be completely honest, I didn’t even hear that the market was down until Friday, when most of the free-fall was over.
If the point of this blog is to write about money, why do I feel like this? Because my money is invested for the long term, which means being fairly agnostic about multi-year changes, let alone 48 hour blips. While some people are talking about what to short (if they think they’re savvy), or pulling their money out of the market entirely (if they know that they aren’t), I’m just sitting here continuing to dump money into the total stock market. Maybe last week was just the beginning, and we’re sitting on the cusp of a new recession. Maybe it was another false alarm, and last week will have been the cheapest opportunity to buy stocks for the next 3-5 years. All I know is that I won’t make the same mistakes I’ve made in the past by making emotional decisions and screwing around with my portfolio just because people think the sky is falling.
What am I going to do with my money? Well I have $2,000 left that I need to contribute across my and my wife’s Roth IRA in 2018. And I have another $760 to contribute to my 529 plan if I want to max out my $4,000 annual state tax deduction. At the very least, those amounts will be going into the market over the next few months whether it’s on the way up or down. And I’m not going to fool myself into thinking I know which one is true.