Stay Occupied, My Friends

The stock market plunged 390 points yesterday. Are you surprised? I’m not, especially in light of the sentiment I’ve been sharing in my recent posts.

Our stock market is a gut reaction to what’s happening out there, and right now, that’s in Europe. The market is only as smart as the last person it talked to.

On Tuesday things were looking up because the Greek Prime Minister had agreed to resign.

However, since we weren’t sure what was going on today with fears that Europe’s sovereign debt crisis was widening, we went into a market spin. Bond yields in Italy surpassed 7%, which means that it may be getting ready to follow in the footsteps of Greece, and of course this was most upsetting for our stock market.

Again, let’s not undermine the complexity of our markets and the systems behind them, but there’s a reason that I keep pointing all of this out to you. This is what it looks like when companies go through crises. Many of them – or at least their CEOs – become as smart as the last person they talked to and the last news they heard.

Learn from the example that international markets are setting for us – and the example of our own market as it reacts to the world’s problems.

Apply this lesson to your personal life, your personal finances and your business’s finances as well. While everyone is selling and reacting and worried, do other things. Go golf or scrapbook or play Metal Gear Solid or whatever it is you crazy kids are doing these days. Get a hobby, but make sure that hobby is not overreacting to the financial situation around you.

Studies consistently show that those who do not get mired in the day to day financial swings around them – and who learn to tune out the related noise – make better longterm financial decisions, are less stressed and are more likely to make their financial goals a reality.

Why? Because they’re not as smart as the last piece of information they heard and they’re not acting on everything! If you bought and sold as fast as the market swung you’d be nothing more than strung out, stressed out and broke.

Instead of the Dos Equis, “Stay thirsty, my friends,” I encourage you to, “Stay occupied, my friends.”

What do you do to tune out the financial noise and distract you from the market’s volatility?

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