Don’t ask me about the market

My husband and I used to have this running dialogue when I got home from work. He’d ask “What did the market do today?” and I’d reply “I don’t pay attention to the market, I pay attention to my clients.” It’s true, what benefit does the market derive from my attention? Does it grow? Does it flourish? No, it just does its thing which, over decades, is an upward kind of jig.

It’s important to remember that the stock market is a reflection of all of our thoughts and behaviors. If we are all feeling very cautious, and holding money in cash rather than investing it, the market will get depressed because no one’s coming out to play with it. Conversely, if enough of us go to the market (which typically only happens when we’re quite certain the risk is reasonable), the market will rise on the tide of our confidence. This is a great oversimplification, but you get the idea.

The day-to-day fluctuations are the result of analysts and large investors reacting to various bits of news. For example, if unemployment numbers go down, it’s logical to conclude that people will start buying more stuff because they have more money, and the companies that sell stuff will make more profit, which increases the shares of their stock, which makes investors’ portfolios increase in value. But the next day there may be talk of increasing interest rates and those same analysts may worry that people will recall the 1980s and the high interest rates on Certificates of deposit and will pull money out of the market to put into CDs. This could cause the market to drop in value.

But whether the market goes up or down or sideways, my clients’ lives go on, and those lives have corresponding financial needs. Some clients marry, others divorce, some have children and some of their kids go to college, maybe their kids move out, maybe they move back home, some of their kids need financial help, some need health insurance, some clients lose their jobs, others lose their health and some choose to follow their dreams. It all requires financing. The market plays a role in this financing, but it’s not the star of the show; the client is.

For those of you who don’t feel part of the financial marketplace, rest assured that you do, whether you are aware of it or not. It’s a rather co-dependent relationship; the market needs you to participate in it in order to appreciate, and you need the market to appreciate so that your money can grow and you can finance your life.

It’s your life that interests me, not the day-to-day movements of a faceless market.