Chris

 

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Tuesday
Aug252015

We Could Really Use the Rain

"Well... you know... we could really use the rain..."

How many times have you heard this? Most people don't like rain. We can't go outside. Everything gets wet. Games get cancelled. Plans get changed. But we deal with it because we know we need rain to survive. Instead of dwelling on the negative, we bring up the positive. We might complain about it but we look at the forecast and point out how nice the weather will be next week.

"Well... you know... we could really use the correction...

Did you hear anyone saying this yesterday? The Dow Jones dropped 1,000 points in the morning and everything on the news was negative. Nobody was bringing up the positive. Nobody was looking at the future and pointing out that sometimes we need a correction and the storm will eventually be over. And that's a shame because there are positive aspects to market corrections and downturns. In fact we need them to survive, just as we need rain. Stocks can't go up forever. 

So why does the financial media insist on feeding this panic? Because it gets viewers! What if every time it rained, the weatherman came on TV and told us it was never going to end and an imminent flood was coming? We'd probably all be out there building an ark and gathering canned food. But they don't do that. They give us the long-term forecast and show us how nice and sunny the weekend is going to be. 

Of course weathermen are certainly prone to the same type of fear-mongering as the financial media. Just wait until the next hurricane forms or a polar vortex drops down from the arctic. They know wild weather will get more viewers so they feed into that. But they can't hide from the long-term forecast, and that always shows that the storm ends. 

Unfortunately, when the stock market turns negative, nobody knows when it will come back. There is no accurate long-term forecast that shows a sunny weekend.  For as much slack as the weathermen get for bad forecasts, maybe they deserve a little more credit. At least they tell us when things will get better. And they warn us to take our umbrella if a storm is coming.

I'm going to take a cue from them and tell you to keep your umbrella with you. Stay diversified, rebalance regularly, and always keep an appropriate cash reserve. And instead of turning on CNBC, turn to REAL financial advisors who will give you REAL advice, rather than feeding the panic. My favorites:

Josh Brown

Barry Ritholtz

Jason Zweig

Morgan Housel

Ben Carlson

Bob Seawright

I don't know how long this storm will last. There will be breaks of sunshine when the markets go up. But there could also be long periods of rain. Just keep your umbrella with you and you will survive the storm.

The views expressed represent the opinions of L.K. Benson & Company and are subject to change.  These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person.

Please see Additional Disclosures more information.

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