Learning to deal with the dips

S&P 500 suffers 2nd biggest loss of the year

The DOW was down almost 1%, the NASDAQ tumbled more than 2% and the S&P 500 didn’t do much better, sinking nearly 1.5% – its second biggest loss of the year.

And that’s not a bad thing.

Now, before you roll your eyes, I’m not about to pontificate about just how overdue the market is for a correction. If you read my blog at all, you know technical mumbo jumbo just ain’t my thing.

I’m not going to talk about how trilled I am to have an opportunity to scoop up some of my favorite companies at a discount, either. Stop groaning, I’m serious. As much as I like sales, I’d rather have the 2% of my portfolio that vanished into thin air today intact.

Oh well.

The reason today’s dip isn’t bad for guys and gals like me, though – investors still fairly new to the game with plenty left to learn – is because we can do exactly that. We can learn from it.

Quick … why did the market take a dive today? Tensions over North Korea? Maybe, but I honestly have zero idea. Good thing that’s not important. Why the market went down today is irrelevant. The market goes up and down for all kinds of reasons all the time. It happens.

What we can learn, though, is how to deal with the dips.

I’d argue that’s one of the most important things young investors need to figure out. Today’s dip was significant because we haven’t seen many like it recently. In other words, it felt significant. In the grander scheme of things, though, it was just a blip on the market’s radar.

It hurt seeing hundreds of dollars siphon out of my account today, but for all intents and purposes, my portfolio remained unchanged. I didn’t lose any stocks, none of them cut their dividends and my forward annual dividend income is as strong as ever … right where it was when I woke up this morning.

Days like today are great for young investors because they can teach us to trust the process. If we freak out and start messing with things when the market drops by a percent or two, what are we going to do when it falls 10%? It’s something all the talking heads say will happen at one point or another, and it’s something we need to be ready for.

And by ready, I mean ready to ignore. Don’t react to it, roll with it. The market, if and when a correction or crash or whatever does finally happen, will inevitably, eventually, bounce back. It always has.

Today’s Dividend

American Express: AXP helped soften the blow by paying me a $0.32 dividend for the one share I own. It almost made me forget about the hundreds of dollars worth of equity I lost. Almost.

March on!

Here are this week’s other posts if you’re interested …

  • Love it Ben. Trust the process, always. Dips are just an opportunity to dollar cost average.

    • Steady Saver

      Thanks! Absolutely … the market goes up, the market goes down, but the plan stays the same.

  • Dividend Seedling

    I agree Ben. I look at these dips as opportunities. We have a similar story by the way. I was even a Sports Editor of my college paper. Robinhood has been incredible for me. I’ve been at this since last spring. I’m investing every dollar I can save. Best of luck to you.

    • Steady Saver

      Very cool! I honestly can’t say enough good things about Robinhood … or investing. It’s been a ton of fun. Good luck to you, too.