By Mary O’Brien, M.D.
Are you afraid to open your financial statements for March? Have the recent market gyrations triggered a sudden interest in Xanax? Nonstop news cycles and social media postings have spawned massive overreactions to every comment made by political or business leaders. Down drafts of 1,000 points can cause even the most seasoned investors to panic. Over the past two months I’ve had to curtail my exposure to the business networks. Watching the Dow Jones Industrial Average plunge 700 points at 2 P.M. can make me feel as if I’m about to go into ventricle fibrillation. I’d rather stay in normal sinus rhythm.
Sadly, that is not a joke. I have a vivid memory of sitting at a stoplight in Little Rock, Arkansas, on October 19, 1987. It was about 5:30 P.M., and I was headed home from my office. Over the car radio I heard, “The Dow Jones Industrials are down 517 points.” I distinctly remember thinking, “Oh, he’s reading that wrong! The DOW couldn’t possibly be down that much.” It was.
Shortly after I arrived home, my beeper went off. One of my favorite patients was in the emergency room (ER) with a massive myocardial infarction. George A. was a 76-year-old gentleman from Hope, Arkansas. He had grown up in poverty but had educated himself and built up several successful businesses. He was bright, witty, charming, dapper, and gracious. But on that day, George A. had lost over a million dollars, at least on paper. He was devastated.
I grabbed my bag and raced back to the hospital. We got George admitted to the cardiac care unit (CCU). His electrocardiogram (EKG) looked awful, and he looked worse. He was utterly convinced that one dreadful day on Wall Street had destroyed his future. Around 8 P.M., George become very ill (coded). We worked on him frantically for over an hour, but we couldn’t bring him back. There was no doubt in my mind that the thought of financial ruin had literally scared George to death. I felt numb.
Later that week, two of my colleagues committed suicide. They had also lost a fortune, at least on paper. Everyone was stunned and afraid that week. One year later, however, the market had recovered nearly all of its losses. Thirty years later I still mourn the loss of three good people. For all intents and purposes, they died from acute financial panic.
I am no financial genius. But forty years of investing have taught me a few lessons that may help someone else:
- Don’t watch market moves minute to minute. Before long, you’ll need heavy sedation.
- Don’t dump stocks when everyone is panicking. You’ll almost always miss out on the best part of the recovery phase.
- Remember the wisdom of the ancient Greeks: Moderation in all things. Balance stocks, mutual funds, bonds, certificates of deposit (CD’s), cash, real estate, and precious metals based on your age, health, family needs, and risk tolerance.
- Don’t give in to ignorance, laziness, fear, or greed. Sixty-six percent of millennials have nothing stashed away for retirement. Failure to invest is one of the greatest mistakes of all.
- No matter what happens, avoid the temptation to overreact. You are infinitely more important than your financial statements.
Now take a deep breath and open the statements from March. Steady as she goes. You’ll be fine.