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Is This Guy Stealing Your…Time?
Written by Steve | Published: |
When I was a teenager my mom and dad decided to buy some jet skis for the family. My other siblings and I were so excited to take them out to the lake, but there was just one problem.
The jet skis were registered but the trailer was not. We couldn’t drive around legally and had to run to the DMV before we hit the lake.
Being young and not knowing what to expect I thought we would swing by the DMV, grab a plate and be on our way to the lake in 10 minutes flat.
Wow, was my expectation shattered…
The DMV took almost two and a half hours! (as they normally do)
Needless to say, we didn’t make it to the lake that day and all of our excitement was muffled by the DMV stealing our lake time.
This week Jerome Powell, the Chairman of the Federal Reserve, made another announcement about rates. He decided to not make a rate hike this month but said that he will need to hold them higher for longer to fight inflation.
Well the market did not like that very much…
And since Wednesday the market declined almost 3%.
To help you understand the scope of this; just based on that announcement. The market cap of the S&P 500 which is around $37 Trillion dollars decreased by 3% which is around $1.1 Trillion dollars.
Is that power or what? (a whole other topic for another day)
To put that in a more relative perspective, if you have $2 million dollars in the S&P 500 the Fed’s announcement decreased your position by $60 thousand dollars in two days.
Now there is an argument that the market will bounce back and yes that could be true, but the announcement took us back to the same market price as:
June 26, 2023
August 16, 2022
April 22, 2022
So there are a couple ways to look at how the Fed affected your time.
First, you can say that the market has been trending sideways (not up or down) for a year and a half meaning you aren’t getting much growth and stealing a year and a half from your retirement.
Or you could look and say if your budget to use money from the market is $5k/month then you lost 12 months ($60k/$5k) of retirement enjoyment.
I like to reiterate to my clients that wealth is a function of time NOT a function of account value.
So am I saying to avoid the stock market?
Well that is up to you, but I would say that if you aren’t balancing your speculative assets i.e. stocks/bonds/real estate etc. with strategies that allow you to lock in your growth month by month or year by year even in a sideways market. Your portfolio could be in a very dangerous position.
