Download the best option for most money decisions

In most cases, the best money decision is in plain sight.

Do I sell stocks? Do I sell the house?

What these decisions share is perception.

Perception that more satisfaction comes with a change to . . .

• avoid loss
• find greener pasture

Instead, skip the money mistakes with one simple decision.

Classic money mistake #1

Sell stocks to avoid turbulence.

In 2020, when Coronavirus freaked everyone out, the S&P 500 stock index fell 12% between March 4 and March 11.

Then, it plunged another 9.5% the next day, the sharpest one-day drop since 1987.

But, the index recovered after the sellers realized the world didn’t end.

From April 2020 to September 9, 2021 the index climbed from 2,761 to a record of 4,499.

After 40 years of observing countless and seemingly unending stock market drops, I’ve learned to . . .

• stand firm and not do something
• accept the meaninglessness of monthly changes
• accept the meaninglessness of annual changes

But, coach, what about the smart people who get out?

You mean the ones who trigger. . .

• gains and pay taxes?
• losses because they mislabel a temporary decline as a long term loss?
• anxiety because they never know when to get back in?

Perhaps the worst day ever to buy U.S. stocks was October 9, 2007.

The S&P 500 Index ended the day at a record high of 1,565.

Seventeen months later, it plunged 57% to close at 677 on March 9, 2009.

On top of this, the S&P got smoked with 20% range declines in 2011 and 2018 along with the 33% COVID crash in March 2020.

So, guess what your annualized return would be if you invested on the worst day, October 9, 2007, and held on through August 31, 2021?

10%.

That’s right, the average annual return of the S&P 500 Index during that time was 10%, the same as it’s annualized return from 1926-2020.

As Casey Stengel would say, “You could look it up.”

Remember, a portfolio of high quality stocks is really a portfolio of high quality companies.

You own companies with earnings, not an empty index, mutual fund or ETF.

Classic money mistake #2

Sell your house because you don’t need it.

This is a tough one because some folks overbought to begin with.

Or they moved there for a job and didn’t choose the locale outright.

No doubt, a move closer to the kids is nice.

Unless they move.

If size, boredom or an odd neighbor bugs you, remember the . . .

• history
• familiarity
• community
• improvements

And the trees.

The best option?

Patience.

And then you do what my good friend Jim tells me the best fishermen do.

Wait longer.

Wait through . . .

• the boredom
• the doubt
• the anxiety
• the fear

. . . and be rewarded with all that comes from being a good fisherman.

The prize is right in front of you.