Thanks Mickeyd - a good post on perspective and timelines.
In 1982 I had put some money in the market and seldom thought about it. But by '86 (the market had gone from below 1,000 to well over 2,000 and "not a lot of money" had turned into "holy crap, look at my balance". Gee, what a golden age I was living in - the market just kept making me money. And I wondered why other people weren't as smart as me.
On Black Monday in 1987 I heard the news of a "stock market crash" over the radio as I was driving home from work. At home I found CNBC or FNN on TV and tuned in to watch what seemed like the disaster of a lifetime. After the markets closed they rolled the tape and I got to watch it all over again. (maybe I was hoping it would turn out differently the second time around!) The notion that I was an idiot dawned on me right after I realized that markets do go down just as easily as they go up - it just hurts so much when they go down.
Being close to dramatic events always skews one's perception. Back then Black Monday looked like this:
But within a few years the drastic dip had been made up for by a resurgence in the market that started within just a few months. In fact, within three years we were looking at another dip in the market.
Now, here we are 19 years later and look at that little pimple on a gnat's ass:
It's amazing what lengthening the timeline does.
Unlike some investors on that day 19 years ago, I held on to my positions. Mostly because of advice I received from a smart woman (Thanks Jollie) who listened to her older and more experienced clients. It consisted of something like "Don't bail - the smart money is staying in or buying more - this was the market going crazy while the economy is just fine." And she put the amount at risk in perspective for me when she referred to all her other clients as people who had "real money" in the market (I thought I had a fortune - she made it sound like lunch money). She reminded me how young I was and how that should affect my investment timeline.