History Rhymes

I wanted to throw up.  My body flashed hot and cold, and I could feel the blood thumping in my temples like giant drums.  My thoughts raced like wild fire, a tempest out of control.

I kept thinking about what I could do with the $1,000 I had just lost in the stock market.  I could have paid down more of my student loans.  I could be that much closer to eliminating the PMI on my mortgage.  I could just have it in my bank account as an emergency fund.

It would take me weeks of work to regain that money after taxes and normal cost of living.  What was I thinking putting my money in something risky like stocks?  Stupid, stupid, stupid!

My life was over.

The automatic 401k contributions from my paycheck continued.  I should have had them stopped, but it was too much hassle to go to the HR office.  I just ignored it instead.

A few weeks later, I dared to look at my 401k again.  It was up!

Over the next few weeks it was up $1,000, down $1,000.  Up $1,000, down $1,000.

This was nothing a spoonful of Pepto-Bismol couldn’t cure.

“My stock is up 150%!”

“Global Crossing is up 300%!”

“Qualcomm is up 10x!”

My friends were excited about their big gains in tech stocks in 1999.  The Internet economy was changing everything, brick and mortar businesses were on their way out.

I felt like I had missed the boat, having focused on paying down my student loans. Stupid! My 401k was up, but nowhere near as high as these companies that were changing the world overnight.

And then, also overnight, I lost $10,000!  The market imploded, and I felt like I had just been punched in the throat.  $10k was easily enough to finish paying off my student loans.  How could I have been so reckless?!  Stupid, stupid, stupid!

I buried my head in the sand for months.  The 401k contributions continued.  The fear and worry slowly passed.

In September of 2001 I woke up to footage of a plane crashing into the World Trade Center in NYC.

Before trade on the stock market was halted, I had lost over $10,000.  I felt sick to my stomach, but for reasons completely unrelated to money.  I cried on the way to work, listening to the radio coverage of the terrorist attacks.

When the markets opened again, I put all of the cash I had into an index fund.

Over the coming years I would gain and lose $10,000 in a single day countless times.  No big deal.


The first time I lost $100,000 is a vague memory.  I know it happened, but it is unclear to me how or when.

I do remember 2008 though.  The market dropped 25% and I put half of my cash and bonds into a stock index fund.  The market dropped another 25% and I went all in.

The market dropped further, and I was pissed that I didn’t have more cash! I considered borrowing money on margin to buy more stock, but my conservative side won out.

When the losses were summed up, I would be down over $400,000.

I slept like a baby.

This past week I’ve seen our portfolio gyrate up and down, the value changing by more than we spend in 4 or 5 years.

Yet I looked in our brokerage account and the number of shares of stock we own hasn’t changed in the slightest.  Kind of like our lives.

The hysterics in social media are mildly entertaining.  Donald Trump blames it on China and Megyn Kelly.  China blames it on an international conspiracy and rogue traders.  I yawn and go back to sleep.  This is what markets do.

This too shall pass.

What is next?  Who knows.  Maybe the market will plunge downwards.  Maybe it won’t.

But the engine of innovation continues.  Human ingenuity knows no bounds.

I gaze back at our portfolio’s history and it looks nothing like an emotional roller coaster, and everything like an amazing creation of wealth.

And to think, once upon a time I was worried about losing $1,000.  Exposure therapy works.


Memory Lane