Dow 22K: Now What?

Last week the Dow hit a record high of 22,000. This record spurred lots of conversation throughout the financial media, and the media here in Nashville  was talking about it, as well.  Nashville NBC affiliate (WSMV) reached out to me for an interview.  You can see the story here.

The question is: Dow 22K, now what? To expand on the comments I made on camera, it’s actually quite simple.  This barrier of 22k is one of arbitrary importance.  While the Dow edged closer to 22k, we continued to stick to our plan. We continued to control the things we can control: how much we spend, how much we save, and how much we pay in taxes.  But, once the Dow hit that magic number, the questions started. 

We must remember that we can not control the stock market.  This does not mean we should ignore the stock market or take a hands-off approach to investing.  We must maintain balance in our portfolio and manage risks, but hitting an arbitrary number doesn’t mean we should change our plan.

It’s not about changing our financial course simply because we crossed some psychological line. Another way to look at is to flip the issue and remember back to 2008-2009.  My clients and I stuck to our plan, and we didn’t make any decisions outside of our plan.  So, if we were disciplined enough not to change direction when things were tough, why would we want to change direction when things are good?

Dow 22k is just a point…not a destination.  For some Dow 22k is exciting and for others it may be frightening, but for those who are disciplined it is just a number. It’s more important that we focus on the things we can control, so let’s continue to stay on plan and live our life everyday to the fullest.

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