As the days turn into weeks and weeks into months, it seems as though our lives move at an increasingly crazy and frenetic pace. We pinball from work to home to kid’s sports and activities to errands to any other of the dozen things we try to pack into a 24 hour period. While this is exhausting, most of us find satisfaction in our lives and even enjoy the ride. However, the one thing that we tend to lose most often and most easily in our lives is perspective. This happens because having a proper perspective on something requires that we take some time for ourselves, calm down our thought process and really observe what is happening around us and what may be influencing our opinion.
I am most intrigued by how our perspective changes regarding a certain topic or subject when our environment changes. We are so easily influenced by a random social media post or ten second news clip that we don’t even know that it is happening. The stock markets provide a great example of this point. Take for example, the Dow Jones Industrial Average, known more commonly as “the Dow”. It is nothing more than 30 large US based stocks. That’s it! 30 stocks whose performance is calculated and represented daily in the Dow Jones Average. Think about how differently we perceive our financial futures and feelings towards the economy as a whole when the Dow gives us three rough days in a row versus three strong days in a row. Then consider, over those three days, what actually changed? Likely nothing has changed, but our perception that it has will still influence our decision making. Those three days will make almost no change on the overall outcome of our retirement plan.
It is natural to react to things that happen. It is programmed into our DNA and instincts to react. However, how we think and behave after that initial reaction will determine the actual impact to our retirement plan. If three bad days or weeks or even months motivates us to change our investment allocation in a negative way or begin timing the markets, then we have likely caused harm to our plan’s outcome. Volatility has picking up in the world markets and begun to test our ability to have proper perspective.
It is natural for any of us lose perspective with all that happens on a day-to-day basis. We have more responsibilities and demands on our time than ever before. That said, we do still control our lives. Remember, slow down, calm down your thought process and take time to observe what is happening around us. Perspective is what makes us feel normal in a crazy world.