Last October, my wife and I took our youngest daughter, Kulia, age 9, and middle child, Mason, age 20, to Disney World. Check that off the to-do list.
We had a great time building memories as a family. Over the last several years I've been focusing more on creating lifetime memories rather than getting more stuff. One client recently told me their Christmas goal with their kids and grandkids was to do more rather than get more. For example, they gave the gift of a dog sledding adventure. Pretty cool.
For those that have been to Disney, you are probably familiar with a ride called “The Tower of Terror”. This ride takes place in a ten-story building that's built to replicate a rundown hotel. As you stand in line, there are fog machines creating mist along with eerie sounds trying to create a lot of fear prior to your ride. As you enter the hotel, they put you in a scary library, and then a basement with all sorts of mechanical stuff making weird sounds. Kulia was pretty creeped out.
Once you get to the actual entrance for the ride, you enter an elevator and take your seat. Once strapped in, a video of old Twilight Zone clips begins to show along with eerie music. The ride meanders through some rooms and then stops back into the elevator. That's where the fun begins. The ride slowly goes up and then immediately crashes straight down several stories. Then up again and down. It's over in just a few minutes.
Ironically, at about the same time that we were at Disney World, the financial markets experienced its own “Tower of Terror” thrill ride. What caused these gyrations this time? Ebola; Isis; rising interest rates in the US (which we've known for years) growth concerns in Europe and Asia, the Fed ceasing QE (which was known for years). All headline news causing fear. As I write, we're hearing about a terror attack in Paris. These are real events that cause real concern, real anxiety, that can lead to fear and panic which, in the financial markets, causes short-term volatility.
Remember, volatility is a temporary increase or decrease in the value of an asset. The decrease impacts us more emotionally than the increase. This is normal and expected. No matter what type of investment strategy one has for their portfolio, volatility will happen.
In the previous five years, we did not experience such extreme volatility as the last six months. We've been somewhat numb to volatility. My point to all of this? Stay focused on your long-term goals, re-evaluate your entire financial picture, diversify, give, develop and stick to your plan, include your spouse or significant other in decisions, reduce debt and turn off the media noise, especially if it's creating anxiety.
Ross Haycock, CFP®, CRPC®,
AIF® Vice-President
