The Stock Market, playing the long game, and the importance of setting long term goals.
The past couple of weeks have been a wild ride for those following news of the stock markets. Wild swings, low dips and sell offs not seen in recent years, and speculations about uncertainty in foriegn markets. To many outsiders and armchair analysts, there were fears of bubbles and overvaluations. Allusions were made to the crash of 2008 despite this being nothing like 2008. But, there are many who make profit from such FUD, so here was an opportunity to spread it.
But, those in the know pay little attention to the daily ups and downs of the market. They know that, while the Day Traders might make some fast cash to spend on hookers and blow that way, it has little to do with true wealth. Those who know the market know those folks play the short game.
The smart players, at best, see such low dips as a buying opportunity — like a retail Labor Day sale. Most just ignore it because 3% off is hardly a bargain to tell your friends about. Nay, the truly market savvy are looking far out into the future. The trends they look for are not measured in days or weeks, but years. "Let’s look at where this stock was at 5, 10, and 20 years ago" they’ll say. Because that’s how true wealth is built and measured. They play the long game.
To put it in a concrete example, if you bought $1000.00 of Apple stock in 1998 and still had it today, would you really worry if it took a 5% hit tomorrow? The correct answer is "No". Why? Because you would not only be so far ahead today in 2015 it would be silly but you know that in almost 20 more years it could easily be worth 10, 20, or even 100 times more. Why, because it is worth a hundred times more now than when you bought it less than 20 years ago. The long game is almost always "bull".
This is why it is important to think about, name, set, plan, and work towards multi-year goals. What goals do you want to achieve in 5 years? How about 10 years and 20 years? What does your life look like? What seemingly daunting yet massive, slightly scary, but oh-so awesome things are there? Have you thought about that? Have you put a name on them? Are they on your calendar? Have you mapped out how to get there and achieve them? Do you have a rough idea of the steps you need to take?
If not, you are basically playing the short game with your life. And, frankly, like a Day Trader your success and failure is at the whims of your daily to-do list. Get a lot done today and your life is a bull market. Get little done and it’s a bear market. And, like the Day Trader, your life will feel rich one day and bankrupt the next, more than partially due to forces beyond your control. A boss who dumps a project in your lap or a colleague who interupts you or the person that pulls you into a last minute meeting or the kid who gets sick or the car that breaks down. All of these can sweep in and kill the action of those without goals. Just like China screwing with their currency can send the whole world of short players into a tizzy, so can just about anything wreak havoc on the short player’s task list.
But, those with meaningful, long term goals, know to mostly ignore the fluctuations in their daily grind. That all of this is towards a larger and more meaningful goal. That success is measured in years and not days. You know that the value of that item on your list is a pittance because it will pay off one hundred fold when you finally reach that lofty goal. And if you don’t make any movement on it at all today, hey you’ve got 5,10, or 20 years, and with that much time just about anything is possible.