Last year (2022) was brutal for the major averages (not including dividends): Nasdaq -33.1%, Russell 2000 -21.6%, S&P 500 -19.4%, and the Dow Jones Industrial Average -8.8%. But not all investors hung around to see things through. And you know this song: Markets are back up this year.
Let’s rewind.
When the going gets tough, the capitulation begins. And in my observation, a breaking point is reached when a portfolio goes below a certain number. It has nothing to do with the major averages per se. It has everything to do with dollar signs. Will we have enough to live on? And the selling continues.
Then when stocks start creeping higher, what this investor never forgets, dear reader, is the peak value of his account. A number he needs to “get back” to. A number that means nothing to the major averages or the investing populace at large, but which means the world to him.
Having sold when markets were down, and now seeing stocks are back up, he feels it’s time to “get back” in—to get back to where he started from. For this poor soul, he’s always chasing. He’s unsettled. He’s beating himself up. He’s missing another boat. This is no way to live.
Action Line: Don’t be a “get back” investor.
Read every one of the Investing Mistakes to Avoid here.
Originally posted on Your Survival Guy.
