Whenever the market goes down, you need to think of what that means to you in real dollars.
The first two weeks of this year were the worst first two weeks ever in the stock market.
The question is, how much did you lose? Over the last several weeks you’ve likely heard bad news about the stock market. You've watched how the stock market plunges about 2% in one day, or how it’s gone down about 5% over the past week. The stockbrokers smile for the television cameras, and tell you it’s only 2%, it’s only 5%, or whatever the percentage may be. They tell you don’t worry, there’s nothing to panic about. You shrug your shoulders and think it’s not so bad, it’s only 5%. You hear things like, it’s not really a loss, it’s only a “paper loss,” and you only lose money if you get out now. People who make those statements, are generally brokers who don't want to lose your business, or they're people who absolutely don't know what they’re talking about, and they're off in La La Land! It's your money we're talking about, not theirs!
The truth is, it is a loss, because it is real money, because if you cashed out yesterday, you would have had more money than if you cashed out today, period! You think to yourself 5%, it’s not so bad.
Let me ask you a question…How much is 5%? If you had $300,000 in the market, 5% is $15,000. That's a lot of money. If you had a million dollars in the market, it is fifty grand... ouch!
Let me ask you another question… What's the difference between losing 15 grand in the stock market, and losing 15 grand at some casino in Las Vegas? There is no difference, because it's the same thing... you're still losing money!
Whenever the market goes down, you need to think of what that means to you in real dollars. How much money in dollars did you lose? When you think of losses as actual cash, it becomes more real. Why do you think casinos have you play with plastic chips? It's because they don't want you to think of it as losing real money. Why do brokers talk in percentage points? That's right, they don't want you to think of your losses in real dollars. Remember, those percentage points represent real dollars to you.
If you have questions, send an email to David@TheAlemianFile.com, because I answer every email I get.
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