Recession Investing Mistakes for Dummies

There would be this advantage in traveling in your own country, even in your own neighborhood, that you would be so thoroughly prepared to understand what you saw you would make fewer traveler’s mistakes.

– Henry David Thoreau


You think the “experts” know, so you listen

Spoiler alert: Mad Money, Squawk Box, and Closing Bell along with their panel of “expert” money manager fancy titled guests don’t have a clue how long this recession will last, or what will happen next.

It’s entertainment.

These shows crank up your cortisol to keep your eyes glued on more annuity and pharmaceutical ads.

More money for them, more stress for you.

Don’t do it.


You start copiously checking your investment account values

Forget serenity now.

You are stressed.

Not hungry.

Can’t sleep.

You thought a compulsion to binge review your investments would help the S&P 500 recover?

Don’t do it.


You believe “it’s different this time,” and hastily change your asset allocation

Using the S&P 500 index, since 1980 the market has been down on average 13.8% within the year.

Even when 29 out of the past 38 years returns were positive.

Read that three times.

Every year when red shows up, do you sell out and go into bonds and cash?

Do you try and “time it”?

The market goes down. It’s not predictable when, how, or why. That’s normal.

Like arguing in a marriage.

It happens in the best ones.

Did you get a divorce every time you argue with your spouse?

It’s not different this time.

Don’t do it.


You get sold that you need something “guaranteed”

Fear sells: Whole life insurance, variable universal life insurance, variable annuities, market-linked CDs, non-traded REITs, fixed annuities, and fixed indexed annuities.

Sales guys masquerading as a beacon of hope show you all sorts of charts and glossy marketing of how scary the market is.

Wait for it…

Then the solution of how wonderful their superhero product could’ve and should’ve been, and how it’s hear to save you today.

Those products are not coming to your rescue.

Don’t do it.


You get drunk on overconfidence thinking investing is easy

Just buy these three stocks?

Apple. Amazon. Tesla. or whatever someone is making you feel you should own or you’ll miss out.

Great investing is about being mentally tough and disciplined.

It’s not salacious, or sultry.It’s doing the simple.

Really.

Dam.

Well.

Year-in-year-out.

Fancy looking for I-told-you-so investing gets you broke.

Don’t do it.


You do the “hard” stuff, so life is easy: 

You dial in the long-term process of what asset allocation it’s really going to take to get you to your “there”– without you bailing, and a rules based system to implement it.

You rebalance when you don’t want to: buying what is down and selling what is up.

You review benefits and opportunity costs of single premium annuities, when to take social security, and how home equity might create temporary income when you need it most.

You stay smart about proactive tax planning, so the IRS doesn’t eat all your hard-earned income and returns.

Do this today.

Before we have the recession.