Do You Have Stock Market Fatigue?

Suzanna de Baca -- Expert Business Source, 10/14/2008 11:46:00 AM

“The bad news about the market just never seems to go away!” said an acquaintance of mine the other day. A retiree, he was watching TV all day long, interspersing his viewing with spot-checks on various financial sites on the Internet. He moaned, “The terrible economic news is wearing me out!”

As anyone with a pulse in America probably knows, the economy and the markets have been in turmoil for the better part of the last year. For those watching the markets closely – and most people have been lately – the violently gyrating markets have been exhausting. Some days the market swings up dramatically, but other times it plunges or dips, then stays steady for a few peaceful days, and then, boom— it comes crashing down all around us. Riding a real roller coaster at a theme park can be fun – maybe once or twice in a row, but if you were to stay on it all day, you’d probably feel ill. When it is an economic rollercoaster that involves your money, watching the extreme fluctuations day after day can leave even the most calm-headed citizen feeling beaten up.

It is hard to escape the headlines which broadcast doom and gloom on a daily basis, but for most Americans, it is not necessary to watch the markets and economic news 24/7.  Of course, when unprecedented bailouts are occurring, you want to know what is going on, but that is different than checking your 401(k) balance daily or looking at the markets several times a day when in good times you rarely took notice at all.

My acquaintance had become virtually addicted to the market news. He had not been a financial professional prior to retirement, so his constant television viewing had little to do with a fascination with economics. He wasn’t watching the markets like this when the news was good. The irony is that this fellow has significant enough wealth that he will never run out of money during his lifetime – so his watching and worrying was not about going broke, or even about being able to pass on his wealth. It was really more about not being able to pull himself away and about his habitual focus on the bad news. 

I told this particular person that following the financial news minute by minute was a good way to make himself sick – especially since he could personally do nothing to control it. It is exhausting listen to bad news day after day, but it is even more damaging to plant yourself in front of the TV or computer and seek it out on a continual basis. 

Go outside and enjoy the lovely fall weather, I said. Read a good book.  Look at everything that is great in life and get yourself in a better mood. Just look at the news at the end of the day, not all day long. Since his portfolio was professionally managed and in great shape, I said, why spend all day micro-scrutinizing action that was only making him feel worn out? Even if you are a retiree facing a very difficult time, it is better to stop, make a plan, and then move on than to obsess over every swing of the market.

To digress for a moment, consider a similar period of market related weariness: the year following the tech bust, and 9/11.   In March of 2002, when the market was desperately trying to recover from that dual devastation, coupled with a generally weak economy, Forbes columnist and best selling author Kenneth L. Fisher discussed market fatigue in one of his columns.. Although at the time Americans were wondering if we would ever recover (sound familiar?), Fisher was referring to the vigor of the market itself. The title of the article was “Fatigue-O-Meter,” and Fisher wrote, “The market lacks the energy to break into bullish territory.” 

Depending on which economist you believe, it may take a while for the economy and market forces to regain the strength to improve; so meanwhile, it might be a good idea to take your own “Fatigue-O-Meter” reading. If your finances are sound –even if battered – and you have concluded that the best thing is to wait it out, then set some market boundaries. 

So, my unusual point for a financial professional is this: if you’re feeling exhausted, consider taking a break from your intra-day market monitoring. It is possible to remain financially healthy without constantly monitoring every move the Dow makes or checking your 401(k) every day. In fact, it is probably financially and emotionally healthier to be selective in scrutinizing the news.  

Every time we’ve had a period of economic decline, we’ve recovered. Those who worried themselves sick during these periods – rather than either taking productive action or trying to maintain perspective – wasted their energy and the outcome was the same. Or they worried and made poor decisions based on fear. This time, try to take care of yourself physically and emotionally so that you’ll have the mental fortitude to make good decisions and also to enjoy the rest of life that is happening outside the markets.  

Suzanna de Baca is president of Private Capital Solutions Group. Securities offered through Broker Dealer Financial Services Corp. Member FINRA & SIPC. Investment Advisor Representative of Investment Advisors Corp., A Registered Investment Advisor.  Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal or investment advice. Although the information has been gathered from sources believed reliable, please note that individual situations can vary, therefore the information should be relied upon when coordinated with individual professional advice.