This week, we’re talking about the immutable principles of successful investing.  Successful investing for the long-term requires discipline and sticking to a set of unchanging principles. Today’s immutable, unchanging principle is: don’t freak out!

Managing your emotions - particularly fear and greed - is one of the most important characteristics of a successful investor.

In fact there have been many studies that show that investors are generally pretty terrible at managing their emotions, and as a result, achieve some pretty dismal returns.

Here’s the reality: Yes, we will have another recession. Yes, the stock market will drop. Yes, your portfolio will drop - maybe as much as 20, 30, or even 40%.

You will open your account statement in the mail and want to cry. Or vomit. Or maybe both. Then what will you do? Will you freak out, sell everything, and put it under your mattress?

Then what? How long will you wait before you put your money back in the market, or will you sit on the sidelines for the rest of your life?

If you have a million dollar portfolio and it drops by 30%, that’s a $300,000 drop. How long did it take you to save $300,000? A couple decades most likely, and now it’s been wiped out in the course of maybe 9 months.

So there’s no sugar-coating it. Significant losses in a down market can be devastating. Especially when you’re close to or living in retirement. But in order to be successful long-term, you can’t let your emotions get the best of you. Do whatever it takes not to sell. If you have to stop watching cable tv news or shred all your statements without opening them for the next year, so be it.

The key here and the immutable principle of today is: Don’t freak out.

That’s it for today. Tomorrow, we’re going to recap the week and I’m going to give you a little preview of next week’s theme.

My name is Ashley Micciche and this is the One Minute Retirement Tip.

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