Nearly 11 years ago, I was a high school student in small-town Kansas who had just received news that my parents had purchased a car for me to drive. I was ecstatic, and yet knew none of the details about this vehicle.
A 1997 Isuzu Rodeo that at the time was in Florida. I recall having the thought, “I’ve never even heard of an Isuzu, but at least this involves a trip to Florida!”
My dad and I packed our bags and were off on a one-way flight to pick up my new wheels and cross-country road-trip-it back to the Midwest. Upon arrival, I learned my dad had failed to mention perhaps the most important detail of the entire trip—this SUV had a standard transmission.
As you can imagine, I had never sat in the driver’s seat of a standard, and yet here I was expected to help drive this car 20 hours home. Some of my fondest memories shared with my dad are from this trip. Of course, those memories also came with several life lessons.
- Thinking I was a funny teenager, I learned not to quickly move the steering wheel back and forth while driving down the interstate. I can still see and hear the panic in my dad’s eyes and voice as he reminded me I was much too young of a driver to pull such a stunt.
- Near the beginning of our journey home, I found myself in the Sonic drive-thru trying to exit on a slight hill. I’m sure you know exactly where this is going. Frozen with my eyes locked on the rear-view mirror because the car behind us had given me no room for any amount of backward roll. My dad’s advice—“Give it gas, Sister!” My tire marks are likely still on that road.
- Fast forward to arriving home and venturing to high school in my new wheels. As part of my big-sister duties, my younger brother hopped in the car at the 3:00 bell so we could drive home. I backed out of our spot and tried multiple times to put my Rodeo into gear, only for it to lurch forward and the engine to die. I was flustered, my younger brother was embarrassing me (of course), and people were staring, when I noticed the emergency brake still in place.
These moments remind me of a few lessons we can all remember as investors in a turbulent market.
- “Swerving” to avoid market downturns can create more disruption to your financial plan than staying in your lane, driving straight ahead.
- We can all use a lesson from my dad when the stock market is down—”Give it gas!” These are opportune times to invest any excess cash you may have as securities are “on sale.”
- While an emergency brake is necessary, there are times when it can hold us back. I think of this as asset allocation. We believe in the importance of asset allocation, which may include fixed income. However, there will be times when fixed income, aka our emergency brake, will not perform as we expect.
If I were to get back in the driver’s seat of a stick-shift vehicle today, I would most certainly “kill it” a time or two before muscle memory took over and I was coasting. As investors, we may feel a similar reaction after experiencing positive markets over the past few years. Stay in the driver’s seat, ride out these hiccups, and focus ahead on a smoother ride.
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