Lately the major stock indices have had some pretty wild swings - both up and down large amounts in one day.  I can’t tell you how many times a day I hear people freaking out because “the market” is having a bad day.  Let’s stop for a moment - what does that really mean? 

The Market

Usually when people talk about “the market”, they’re referring to the major stock indices.  In particular, the Dow Jones Industrial Average, or the Dow for short.  When the Dow has a tough day / week, people take notice, and hair starts falling out.  That’s just plain silly when you think about it.  After all, what is the Dow?  A collection of 30 American companies.  Thirty.  Out of how many publicly traded companies?  I don’t know the exact figure, but I’m sure it’s well into the thousands.  The thirty companies of the Dow are important, but hardly the be-all end-all of stocks.  Unless you own a mutual fund or ETF that tracks the DOW, don’t freak out.

Your stocks may be fine

When the Dow is off, your stocks may be soaring.  Don’t freak out just because an index is off.  If you’ve done your homework and selected your stocks carefully, then you have nothing to worry about.  Even if you have an off day or two, you have done your homework.  You’ve made solid choices.  There’s no reason to hang yourself or tear out your hair over a little hiccup in the general market.

Remember, it’s a marathon

You’re not a day trader.  At least, you shouldn’t be.  You invest in companies for the long term.  Until you sell your stock, you haven’t made or lost any money.  Relax, take a breath, and enjoy the ride.

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