Is Market Volatility Driving You Crazy?January 21, 2019
Does investing in the stock market mean swimming with the sharks?
It is exciting and empowering to invest in the stock market and watch your investments grow over time. It is the most practical way to save for big goals in a market economy. Investing is increasingly important for women given our rising incomes and our influence on the economy. Yet many women shy away from investing because they feel that they do not know enough about the stock market and are afraid to dip their toes in it. How do we overcome our fears and start to invest?
The stock market makes me think of the ocean and how the two are similar in some respects. The ocean is big, scary and full of sharks. There are so many things that can go wrong when you get in – waves, treacherous currents, shark attacks. Nevertheless, you still go to the beach to soak up the sun and to play in the waves. You do so safely, knowing when it’s ok to swim and when it’s not. You swim in the ocean at your own risk. You invest in the markets at your own risk. You go into the ocean and you invest in the market because the risks are worth taking.
Avoiding the sharks
The stock market is complex and attracts all sorts of investors, including many bent on making money by using questionable schemes. These schemes (dark pools, high-frequency trading, day trading, algorithmic trading) attract a lot of attention and leave the impression that the market is too dangerous for regular investors. The truth is, you do not need to concern yourself with the dark side of the market. The ocean is deeper than anyone can imagine and full of creatures we cannot fathom, but we do not think of them when going for a swim. There are safe waters we can enjoy.
If you know how to avoid the sharks, their jaws will not touch you.
..You swim in the ocean at your own risk. You invest in the markets at your own risk. You go into the ocean and you invest in the market because the risks are worth taking.
Developing the Skill
The basic reason you go into the ocean is because you know how to swim. But no human being can swim without first learning - you try and fail until you get it right. And with that skill comes the confidence to swim further out and venture to the deep end of the pool. The same is true with investing. You need to have a basic understanding of the markets – how you can make money and what will get you in trouble. Then you need to wade in - start small and safe, succeed, learn from the experience and gradually grow your Investress skills.
Where can you learn?
This is all good you might say, but how does one learn about the markets if nobody is teaching? You cannot hire an investment instructor like you can hire a swimming coach. You can take a few courses or get certified (earning my CFA designation took the 4 toughest years of my life) but that is impractically time-consuming and likely not part of your career path. Alternatively, you can hire a professional and trust them to do what is right for you. Nevertheless, that alone will never make you into a genuine believer in the markets that you need to be in order to stay with it through market cycles. I could not think of anything existing in the market today to help women become confident Investresses– a surprising state of affairs given all the publicity about the impending wealth transfer to women!
To do my part in encouraging investing, this spring I am launching a course and an investment program to accomplish two things:
1. provide the participants with practical, actionable education about the stock markets; and
2. enable them to build safe, sound portfolios as well as actively manage their investments with my guidance.
I jumped into investing with both feet in my early 20s and never looked back. Having lived through multiple market cycles, I have plenty of experience to share. I hope to see you in one of my classes.