When The Market Turns

Sale PSA: A lightweight Moncler coat, now 30% off, a great cropped hoodie from Free People, now $41, and the Everlane Day Boot (still my favorite short bootie) in Ecru, now 20% off.

Hello! Today I’m answering a reader question – about the stock market and purchasing (yes!):

Hi Kat,
I know you invest and I was hoping you could write a post about the market and when it goes down and how it impacts your purchasing. Are you concerned/worried? Does it make you buy less?
 

So I normally store up reader questions and get to them much later but I was just thinking about this and wanted to write some thoughts! If you’re a fellow investor then I’m sure you’ve seen the carnage in the markets – a few down days and you can lose way more than if you had made that X,Y,Z, splurge (though of course equities are very diff. than shoes and bags! no flame comments please!) I’m actually sitting here writing this post Sunday afternoon (procrastinator) and so it’s anyone’s guess how things are going to go tomorrow in the markets. But there’s been a lot of backsliding and I’m as curious and worried as anyone else. That being said – here are some thoughts:

Don’t panic! If you believed in a company enough to buy it’s stock then you still likely believe in it, right? It wasn’t just a gamble. If that’s the case, then be calm and ride it out. Of course there are always cases where you need to cut your losses but otherwise there are days (and longer) when I don’t look at my portfolio if I know it’s going to be bad.

Does how the market performs impact my purchasing? Not directly, at least. I have a separate account which is in cash or cash equivalents that I use to buy frivolous items so to me they aren’t related. There are a few items on my wishlist that if they appeared, I would jump on them tomorrow even if the market continued to crash. That’s what the cash is there for! But…

Psychologically the market still does impact me. And that’s alright, too! I think it’s okay to allow yourself a little anxiety when the markets are going crazy and your account balance is showing a big negative number for the week. OR when it’s showing a big positive and you’re feeling flush! It’s normal and despite all I tell myself about the normal course of markets there’s always that sort of panic. One thing I’ve learned is that it’s okay to allow yourself not to be perfectly rational. I mean, if you were, then maybe you could be a genius and make tons of money in the markets (maybe you DO?). But how about you go out, take a walk, or clean out your closet…the latter always calms me and maybe you can send to The Real Real and make some money to boot.

One other thing – though I generally don’t let the market dictate how I feel about luxury purchases, it CAN also make me want to buy less, in that stocks are cheap! I was going to finally pull the trigger on a little Bottega bag this week (the green is so cool) but ended up not doing it because I decided maybe I would like to save the cash to buy some stocks instead.

Anyway…let’s end with my overall disclaimer that I really am not a financial expert and this is just my individual experience in the markets, as we enter what will likely be another dramatic week. I would LOVE to hear how other investors are thinking about their investments and also purchasing given the current uncertainty! Does the market’s performance impact your spending at all?