Markets fell today, by much. I was reading in disbelief how drastic the losses were, and it was actually very amusing to watch people react to the news. The worse the news got, the lower the markets dropped. I can understand if you’re a day trader, this one-day loss probably matters to you, but otherwise, what’s the worry? Don’t the markets always go up, even if eventually?

Interesting article on CNN/Money, Survive a market crash – and make it work for you, says:

“…there’s such a thing as paying too much attention to your money. In the late 1980s, Paul Andreassen, a psychologist then at Harvard University, conducted a series of laboratory experiments to determine how investors respond to financial news.

He found that people who pay close attention to news updates actually earn lower returns than people who seldom follow the news.”

We own very few stocks, for a total of about $2,300, minus paper loss of just $108 today. Percentage-wise, it’s pretty big. A bit offset by the recent stock run-up, so in reality everything is back to what it was just a couple of weeks ago. I’m not worried. Definitely not going to ignore the news, but not so worried that I’ll put off investing.

Moral of the story? Don’t be a sheep, don’t sell stocks on a day like today.

A lawyer who was closing our condo deal – I can’t truthfully call him “our lawyer” because that was the only time we ever hired him 🙂 – told us about this house he bought in the late 80’s right before the real estate market crash of the early 90’s in Canada (I hope I got the dates right). The house lost about 20% of the value, but the guy held onto the house for the next 10 years, and eventually the price went up 40% above what he paid. I’d say patience pays. Over time, of course, but I don’t think it’s such a bad deal. You patiently wait, and it goes up eventually. You get more for doing less.

If you were going to buy a particular stock, it probably went down in price today along with everything else. If you did your research and the company’s fundamentals are good, as they say, it’s gotta be an even better deal now. See the lemonade in this lemon’y market. That’s my plan for the week. I don’t think it’s over yet, so I’ll try to watch for the bottom and buy the stocks I’ve been watching for awhile. They say market-timing doesn’t work, but I think significant drops like this may be one of the better opportunities for trying to time it.

5 minutes later (!). Just got an email from CNN:

Selling is across the board as Japanese investors react to the major decline in U.S. markets.

U.S. looks at Asia, Asia looks at the U.S. and where does it stop?