I recently failed the vision screening test at the DMV, but let me back up…
A few months ago I went in for my annual eye exam. Apparently, I am losing the ability to read small print and feel as if my peripheral vision is getting worse as well. The doctor started off by asking me to read the smallest line that I could. I responded with, “Well, I am more of a big picture guy, Doc.” (I always seem to think I am funnier than my doctors do.)
During the visit I was prescribed some stronger glasses, which I keep telling everyone makes me look smarter. When I went into the DMV I tried to take the vision test without my glasses and failed. I was trying to be a little comical when I said, “Squiggly plus sign ampersand FSCNTOV.” The officer at the DMV did not think I was funny either, so I put my glasses on and passed the eye exam.
I started with this story because I recently heard this great quote:
“Our eyes only see what our brain is looking for.”
We see what we are looking for during bear markets, which often is how much the market goes down in one day or how much money we lose. We narrow our vision down to just the bad things. If we are not careful, we can spend a great deal of time focusing on the things that do not matter.
What we should be looking at is our financial plan and focusing our vision on the larger picture. It is unlikely that any single market move changes your financial plan for the next 20 or 30 years. As an investor your focus should be on the big picture.
My personal focus should be a bit different. I need to watch the details closely as an advisor. I need to focus on allocations and on chances to fine tune our investments when volatile markets create opportunities. In short, I need my glasses.
Bottom Line: When volatility strikes, focus on the plan. Remember that corrections are inevitable and the big picture is what matters. Meanwhile, I will keep my glasses on and focus on the details and the opportunities.
From the desk of Kris Carroll, CFA®, CFP®Investing & Saving, Market Volatility