Links to several of my favorite recent articles on money and life:
It has been a wild ride in the stock markets the last couple of weeks. Although markets have gained back over half of what they lost, they did lose more than 10% from previous highs, making this an official correction. This is in stark contrast to the last couple of years which saw steady gains and very low volatility.
This return to volatility is actually closer to normal than the previous long period of calm, as Carl Richards demonstrates with one of his incredibly insightful drawings:
To have one of Richard’s drawings emailed to you each week just follow this link and put your email address in the box at the bottom of the screen.
You can understand individual investors becoming unsettled by the volatility of the last couple of weeks, but you would expect the financial press, who presumably have been through this before, to take a more measured approach. No such luck, as illustrated by the hilarious cartoon below. The cartoon is not signed, so I have no idea who to give credit to:
Quotes of the Week:
“Attention discount shoppers, the recent stock market dive is a holiday weekend sale. This is your chance to get stocks for less.” – Michelle Singletary
“The stock market is the only place I’ve ever seen where when something goes on sale no one will touch it. But if the price is going up, that is when everyone wants to buy it.” – Scot Lance
Some Random Observations On the Market Correction by Ben Carlson at Wealth of Common Sense
In this article Carlson reminds us that “these are the types of markets where successful investors separate themselves from the pack.” The article also contains a list of headlines you should see during a market correction, but never will. An example is:
SAVERS CELEBRATE AS STOCKS GO ON SALE!
Great stuff!
Why the Stock Market is Crashing Now, and What You Should Do About It by Paul J. Lim at Money magazine
Great article, bad headline. I am fairly sure that Lim, one of my favorite financial writers, didn’t write the headline to his article, because Lim is well aware that a market correction is far different from a market crash, even if the correction happens quickly. The article does a good job of explaining why good economic news (faster growth and increased inflationary pressure) is not always good for the stock markets.
What’s Happening In The Stock Markets by Gary Rabbior at Classroom Edition
This website is aimed at keeping Canadian school teachers up to date on current events, and this article does a masterful job of explaining what is happening in the stock markets currently. Everyone is a teacher, in one way or another, and this article will give you a lot of useful knowledge to share with someone else or simply use yourself.
The Stock Market Is Scary. But Here’s Why You Still Should Invest by Kathryn Vasel at CNN Money
The smartest thing you can do in response to the market correction is almost surely to buy more stocks while they are on sale.
Check Your Paycheck: You Probably Just Got a Surprise Pay Bump by Katie Riley at Money magazine
Almost everyone will get an unexpected pay bump this month due to decreased withholding of federal taxes because of the recently passed tax bill. My last paycheck was $60 more than the previous one. Since I get paid twice per month that is an extra $120 in my pocket. If your pay also increased (as it will for 90% of workers) and you want to leverage the increase to really make a difference, it just so happens that there is a sale on stocks right now. My suggestion is to put the entire pay bump in a stock market index fund such as the Schwab US Broad Market ETF (SCHB). Then set up an automatic transaction to invest that amount every time you get paid. Your future self will thank you.