I don't follow the news all that much but today it send like the world is going nuts over Brexit (from what I can tell it is a made up word for Britain Exiting the UN). The markets have been pretty stagnant over the past two weeks and apparently it was in anticipation for this Brexit vote.
Apparently the British voted to leave the UN yesterday. I'm not much into politics and only care about world economics when it effects my portfolio so I don't understand everything that this vote means or what it will effect.
But this morning all I've been hearing is things like: "Brexit: A Seismic Slap in the Face of Markets", "Welcome to the world after Brexit: Here's what happens next", " Oil tumbles as investors seek safety after UK votes for Brexit", "Stock bulls face a nightmare scenario", "'Brexit' bears resemblance to infamous Black Wednesday", or "Global recession risk now above 50% following Brexit".
Yesterday the S&P 500 closed at 2,113.32, today it opened at 2,056.28 - a 2.7% drop and it will probably fall more throughout the day.
But that's totally OK. This is what the markets do. They go up, they go down, they sore and they crash. We can't stop it, we just have to ride with it.
I figure that by the time I die I will have been investing for about 70 years and in that time I expect that I'll see at least 7 huge drops in the markets. So far I've ridden one - The Great Recession. If this actually pans out to be as bad as they are making it sound then this will be my second - so bring on the wave cause I got my boogie board and floaties ready for round 2.
But I am very sceptical that it will turn out as badly as the reporters make it sound because they are getting paid to make it sound terrible so that people are more likely to read their report. No body wants to listen the economist that says, "Sure, it could cause lower markets for a little bit while people try to figure out all of the fall out but everything will soon return to normal. And technically, market volatility is normal, so one could argue that this is about the most normal thing that could happen to the market because it broke the abnormal market behavior that we've been seeing over the past several years as the markets have steadily increased."
That guy wouldn't get many readers and would probably get fired - wait, that's what I'm saying, crap no wonder why I feel like I suck at this.
But seriously, sometimes we are to quick to recall the bad and to slow to remember the good. Everyone remembers that 8 years ago the markets went into a recession and people panicked and sold and thus lost a lot of money. But do you remember what happened after that? The markets sored and the people who had stayed in made a ton of money. That's the part of the story that everyone leaves off.
And this is going to be no different. Remember that your net worth might fall but the only time that you actually lose money is when you sell investments for a loss. No matter how low they get you still own the same amount of shares and the markets will come back.
Remember that we are investing for the long term and can wether this storm together.