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Intelligent Speculator

How To Avoid Losing Sleep Over Market Crashes

June 28, 2012 | About:

Sleep is supposed to be between 25% and 33% of our life. It’s such a simple concept. Just watch a baby or a small kid go to sleep and you’ll remember how it felt like to go to bed without an ounce of worry. How things change hey? And it only gets worse when you have a first kid. That is when sleep becomes the most valuable thing in the world. Take a look at any new parent and you will see just how desperate we can become for a few extra hours of sleep. Why? I guess those end up making the difference between a joyful, happy day with family, friends and co-workers or a dismal, frustrating, never-ending day. We already lose sleep for so many things in life; kids, worrying about friends or family, about things we did or didn’t do, ideas that should be written down, others that should never have entered our minds, etc.

There Are More Than Enough To Make Us Lose Sleep…

Believe me, there is no need to create yourself additional reasons to have a less than optimal night of sleep. Money can be great but it can also become a source of stress for individuals, couples and entire families. But when you start to wonder if you did the right thing, if you’ll have enough, etc. Then it cane become a source of stress, of broken dreams, of stress which can lead to a whole other group of problems. I’ve personally always felt like one of my goals was to never put myself in a situation where I would be unable to sleep or getting into arguments over money.


7 Steps To Never Lose Sleep Over Money

I guess there are no miracles but here are the steps that I personally follow and that (knock on wood) have worked out well.

1-Have a LONG Term Financial Plan

If you need money for short term goals, travel, etc, then it should not be invested in risky assets. Plan for the long term. Any trips includes unknown adventures but if you keep the end goal in sight, you will tend to reach it over time.

2-Only Invest What You Can Afford To Lose

I do not only mean what you can afford financially. If you know that losing $20,000 within a month will generate stress and panic, than make sure that it does not happen by having a safer portfolio, etc.

3-Do Not Worry About Short Term Fluctuations

Since the money you have invested is not needed anytime soon, it should not matter how much the market gains or loses in a single day or week. You are in it for the long run.


4-Improve Your Financial Security Every Year

You will not always have winning investments but if you are able to constantly save money, and increase your recurring savings plan by more than your income increases, you will both ensure that you are living within your means and that all things being equal, you are putting yourself in a better situation every year. If for example you are getting an average increase of 2 or 3% per year and increase your automatic savings plan by 3%, you will be putting yourself in a great position.

5-Have An Emergency Fund

Nothing can add stress like knowing that any type of bad luck or unexpected expense (such as the car breaking or any other unexpected item) but if you can slowly build yourself an emergency fund that is always there, available to be used if needed, that will already be a huge step in reducing stress.

6-Use A Strong Investment Methodology

As you know, I’m a strong believer in using a consistent investment method and in many ways, dividend investing might be exactly what you are looking for. It’s important to have defined entry and exit points in order to avoid acting through panic. For example, selling off after a big decline can end up costing you big.

7-Have Faith

Through the last century, there have been many different moments of crisis with historically bad markets, a depression, a tragic 9/11 event combined with a tech stock bubble, a huge credit/housing bubble crisis, etc. In all of the cases, some argued that it was the end of markets, that the markets would basically go to 0, etc. But markets recovered in big ways, they tend to always do that.

Bonus Tip

Discuss with your significant other about money, your objectives, etc. Not only in times of crisis but on a regular basis, in order to avoid surprises and to be more comfortable talking about these things when things are more difficult.

In the end, you might not be able to sleep as well as some but you won’t be too bad off either:)


What Are Your Thoughts? Do You Tend To Lose Sleep Over Your Investments?

Rating: 2.5/5 (20 votes)


Aspenhawk - 5 years ago    Report SPAM
I do not lose sleep as I have preset stop losses, mental stops most of the times.I try to cross-check-List all investments so as to know why I do invest. I have a big time-frame for ideas to come to fruition. It is difficult to believe anybody, and difficult to remain humble. It is very easy to brag or speak and very painful to succeed in the market of stocks. This is not a stockmarket ! If enough dry powder is at disposal, then any substantial drop in prices is a good opportunity. Selectivity and diversification looks like a must. Market looks like a body ! At times it dances, at times it rests, at times it wakes up, and at times it better look for a doctor. Stocks are just stocks, pieces of paper, therefore it is vain to fall in love with them. Stocks owe you nothing, but you owe yourself to do your homework. Insiders buying is not always to be trusted. At times insiders get it all wrong, the like General Maritime insider some time ago, buying 1 million shs at 2 $ and losing it all. There is a time for every thing.
Superguru - 5 years ago    Report SPAM
market crashes are good. They provide buying opportunities. problem is central banks intervene before prices get really attractive. I lose sleep worrying fed will intervene before i am able to buy.
BEL-AIR - 5 years ago    Report SPAM
Yes that is the problem, as soon as the market starts to go south and I get excited, the government prints more money or has an operation twist and screws up our buying opportunity..

Just wait and see, one day they will have QE 24, but this time the market will keep going down, when the peoples see this they will shit their pants, then after the crash and the dust settles, get out your wallet and start spending some crash on what will be some great prices on fabulous business..
Mo77 - 5 years ago    Report SPAM

1. Don't buy stocks w/ borrowed money or on margin

2. Don't buy stocks w/ borrowed money or on margin

3. Don't buy stocks w/ borrowed money or on margin
Ramands123 - 5 years ago    Report SPAM

Good artical..No investment is worth a good night of sleep.

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