  It’s hard to pay attention to a stock market that opens several hundred points down and keeps plunging, only to recover most of the drop on breaking news of a 3/4 point Fed Funds Rate cut.  But it does get one’s attention. If you’re not out of the stock market right now it’s a little late to start.  I’m still riding the tumultuous volatility, and holding on with a firm look toward the distant horizon. One that I won’t reach for 10-15 years or more. Besides, this is a pretty darn good time to invest for the long-term. The average P/E ratio for the S&P 500 is right around the historical average of 15. That’s pretty fair valuation for a long-term investor. Doesn’t mean there won’t be tough times ahead though- we face a lot of other challenges that a Fed Fund’s Rate cut may have little impact upon.
But lately the market reminds me of the Big Bad Wolf.  If you haven’t seen the 1933 Walt Disney short cartoon of the Three Little Pigs, it’s definitely worth it. This 9 minute cartoon captured the nation’s attention during the Great Depression.   It’s a wonderful cartoon and musical combination that perhaps found resonance among the nation for the simple morals that hard work and planning ahead can protect you in the face of adversity.Â
That’s something to consider as we save and invest. The stock market’s recent volatility shows us that asset allocation and diversification provide a measure of strength over time. When the market loses hundreds of points in a day however, it’s hard to find any shelter in the storm. Yet these are, after all, moments in time. Moments that can wreak havoc on a portfolio, no question. But for those who have time, hold on and keep investing steadily, these events will simply be a footnote.Â
Am I afraid of the Big Bad Wolf? Not in the form of the stock market. Right now I feel like I’m missing out actually… I’d love to have a little more funds to invest.  And honestly- there’s little I can do about it anyway, so I try not to let it get to me.  I don’t mean to minimize the financial losses and stress that anyone faces, especially for those close to retirement. But I think there are a lot of other “wolves” out there to be afraid of that I can actually do something about- namely building up an emergency fund of cash, my health, our family well-being and what goes on around us each day.  And as for saving and investing for retirement? I think with committment and disciplined patience, we can slowly build a growing, diversified portfolio in the form of dividend paying stocks, bonds, mutual funds and tax-advantaged accounts. And maybe that ‘ole stock market wolf won’t bother us as much.  He’ll be back to be sure, but like “Practical Pig” I’m building a strong financial house.Â
Realistically, it’s hard to say how long or how severe the economic challenges we face will take to turn around. All the people that are supposed to be doing something are working on measures that can point us in a stronger direction. As many economists have noted, the Fed’s action today is “not an instant fix.” But it’s a start, and they’ll probably lower rates again next week. I’m curious to see what the President and Congress put together for a stimulus. Whatever it is, they need to get it done.Â
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