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From Mark Ford, editor, Creating Wealth: When the market goes haywire—the way it has in recent days—it takes a brave soul to stare the storm in the face and stay calm.
But we’ve said many times there was reason to believe a correction was coming. And this month, it looks like it finally has.
As the market’s climbed, I’ve braced myself for a sudden collapse. But my fear hasn’t been that the market would plummet.
Rather, it’s been that, in such a moment, I’d get scared and act the part of the fool.
Without thinking, I’d sell off my positions.
Over the years, I’ve developed a strategy for keeping my cool, and it’s one I use in my professional life as much as in my private life.
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If I know I’ll likely be upset by a negative situation, I simply imagine the situation 100 times over. I picture myself staying calm. I feel my slow breath, my calm heart, and my steady hands as I envision the event in my mind.
Then, when I’m inevitably faced with the undesirable situation, I remain unruffled—out of habit.
It’s an excellent method for somebody like me, who fears his behavior far more than he fears outside circumstances.
And so, over the past couple of years, I imagined a steep decline in the market and pictured myself behaving calmly throughout it. In these imagined scenarios, I didn’t panic or sell off my positions.
Instead, I remembered all the strategies I put in place to protect myself from a down market. Then, I saw myself sitting back and weathering the storm.
So, when the storm finally did hit this month, I was able to stay relaxed.
Dominick, my broker, looked a little on edge as he approached me to discuss my portfolio. After all, on paper, I’d probably lost $1 million in a single day.
I imagined many of his clients weren’t taking the news quite as easily as I was.
“But Dominick,” I explained, “I know together, you and I have created a safe strategy for my portfolio.”
We talked about my performance portfolio, which uses 25% trailing stop losses to protect me from any substantial downslide. And how my Legacy stocks would survive long after this little blip.
And then, how my overall financial strategy was diversified far beyond the stock market.
The market could continue to go down, we both agreed, but I’d be very well-protected.