A New Context For Market Declines

Jul 24, 2017

From the beginning of stock market history, market declines have spooked investors.  Instead of being viewed as a temporary sale, declines are often considered scary.  But what if you changed the context in which you viewed declines from something scary and to be avoided to a potential opportunity? 

The dictionary definition of context is:

"The circumstances that form the setting for an event, statement, or idea, and in terms of which it can be fully understood and assessed."

 

An example of how context paints your view is when you are sitting on the plane awaiting takeoff, and the stewardess announces over the microphone that she is now going to review how to use the safety gear necessary to survive in the event of an emergency.  If you are like most people, what do you do?  Do you pay attention, or do you continue reading or dozing? Does anybody pay attention?

Now let’s change the context.   Instead of sitting on the tarmac, the plane is having difficulty in flight and has to make an emergency landing.  The same stewardess now has the same conversation about how to use the emergency gear.  Do you listen?  Of course! 

Same conversation, different context. 

The always on, 24/7 world we live in perpetuates the context in which market declines are viewed by most people.  Simply go to any news website or turn on the television on any given day of a meaningful market decline and read the headlines. Do they smack of opportunity or fear?

Change the context of a market decline from something scary to something ordinary, necessary, and a potential opportunity. What if you view a decline as a potential opportunity to increase dividend yield and buy companies on sale instead of bad and something to avoid?   Your new context for the decline flies in the face of what you will be hearing from the media.  But, it’s the only context that jibes with history.  And it’s the context that we at DCM have. Simply pick the date of any market decline, look at where a given market index was then (the world was coming to an end, remember?) and look at how much higher that same market index is today.  Pay attention to the long-term uptrend in the market and not the temporary fluctuations.

Here at Del-Sette Capital Management, we believe that a healthy dose of high quality stock may give you the best chance of meeting your financial goals, and we help our clients view stock declines in the proper context.  Call or email to have a conversation that might just change your context about how to view temporary declines in the market!

 Meeting With Bill

 

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