What Does Down Really Mean?
When we talk about investments and markets, we often say things like accounts are “down in value” or will go “up and down” as they trend upward. I think this is a pretty straightforward analogy for what happens in the markets and in our accounts from time to time.
But many of us associate the word down with a negative connotation. As if the word down, when it relates to investments, retirement, and our financial future, means a doomsday event has occurred, and we will never recover from it.
In reality, that is far from the truth.
Every second of every day, your investments fluctuate in value up or down. Sometimes, they fluctuate in value upwards for minutes, hours, and days. On the other hand, sometimes they go down in value for days, weeks, or even months at a time. It’s less common, but still perfectly normal market behavior.
But something happens when the markets go down for days at a time that doesn’t occur when they go up. What happens, exactly? Simply put, the headlines turn gloomy. The talking heads start spouting off doomsday scenarios about how tariffs, inflation, or foreign policy have us on a crash course for Armageddon.
No one likes to see account balances dip in value. (I certainly don’t enjoy it.) But it’s part of the price we must pay for the rewards offered by owing equities over time. While no one likes down markets, I think they can become much more palatable with a change in perspective.
What if, instead of having a negative connotation attached to the word down, we viewed it as an opportunity? Because, at its core, a down market is nothing more than an opportunity for a long-term investor. If you have cash or idle assets, it’s an opportunity to buy more shares at a discounted price. It’s an opportunity for our money manager partners to buy pieces of companies they longed to own before but couldn’t because they couldn’t justify their previous high valuation. It’s an opportunity for your dividends to be reinvested, buying more shares of your funds at discounted prices. Opportunity is abundant at every corner in a down market. It just takes a different perspective to see it and believe it.
As your financial guides, it’s our job to provide clarity amongst the clouds of darkness, and we do not take our job lightly. We are here to serve you and help you navigate through the challenges of investing for long-term success. Please know we are here to help in any way that we can.
And remember, down doesn’t have to be a four-letter word. When it comes to investing, it’s nothing more than a synonym for opportunity.
*Content Provided by Bill Good
