Know Your Demons-before the stock market freaks you out, think it through

I’M WRITING this just before 6 a.m., following a few days during which world stock markets caught their own version of the flu. Frankly, I can’t sleep thinking about what’s happened—and especially about the investors who panicked and locked in their losses, just like so many folks did in late 2008 and early 2009.

It took me a few minutes to muster the courage to look at my 401(k). When I did, there was no shock: Yes, my balance had dropped. Then I checked the difference from Jan. 1. It’s hardly changed. Perhaps I’ll sleep tonight.

My good fortune—so to speak—resulted from my mix of 40% stock funds and 60% bond funds. I’m 76 years old and have been retired 10 years, but I don’t rely on my 401(k) for income, because I have a pension, as well as Social Security. I like growth, but I dislike going backwards even more. Hey, this diversification thing seems to work.

Read the full story and my cautions on HumbleDollar.

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