Well it certainly has been an interesting year in the stock market for 20111. Countries defaulting, potential entire currency imploding, bankruptcies, some hot IPO’s but with all the news everyday it is easy to lose focus on what the performance of the stock markets have been overall this year. Take a look at the chart below. That is the chart of the S&P 500 this year and I bet if I didn’t tell you might at first glance think it was a volatile technology stock chart.
If you notice also about the chart above that the S&P has really not gone anywhere. Despite all the big moves it is approximately back to where it started the year. Volatility like this can wreck havoc on an investors mindset causing doubt in their financial plans or investing style. There are many professional money managers and traders that lost money this year as many moves were sporadic and news driven.
The biggest thing you can do is look back at your trades or investments that you did during the year and see what you did right and wrong and learn from it. The biggest mistake in investing or trading is never learning from your mistakes. Step back, review your investments and have a plan going forward.
I’ve written a couple post this year that talk about having a trading plan and sticking to your investment discipline so you aren’t swayed by the daily barrage of financial news.
I am sure everyone right now is wondering if the market will get out of the daily news from the Euro/Europe mess, or will we keep having the continued whipsaws every week based on what Germany or other country decide each day.
If you have a plan that is based on a proven investment system or discipline then you won’t have to worry about the news. You can sit back and just reference your plan. Make sure you always have a proper understanding of risk associated with your current investments and always be learning.