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When stocks nose-dive, I take a break from looking at them

By John Toth / Editor and Publisher

I was watching the stock market take a nose-dive recently. I have seen this before - been on a few rides over the years.

It’s an exciting time on the business cable channels, much like the Weather Channel during a major storm. Those guys live for these moments, and you can tell they’re on a caffeine-high. So, don’t get too excited along with them. It will pass.

A friend of mine mentioned a while back that right before the 2008 market collapse he decided to take all his money out of stocks and park it in zero-risk accounts.

“How did you do?” he asked me.

“I lost a bunch of my investments,” I replied. Then he cut in, and I could not finish. He was so pleased that he beat the market. But did he?

I never got to the most important part - that all my losses came back, plus a lot more. Then we changed the subject. I didn’t want to ruin his time. We talked about the weather. It was a warm, beautiful February day.

I’m not a mega million-dollar-type player, but I do like the additional money stock market investments make. Banks don’t pay any interest hardly, and municipal bonds are O.K., but they cap out at about 4 percent right now. If you want to make your savings grow, stocks are a good way to go.

But which stocks, and when to buy? That’s when an investment counselor comes in handy. I have one in my family. I helped raise him, and I must have done it right, because he has been outperforming the market.

I asked my young nephew many years ago when he was staying with me to open up the Houston Chronicle business section and look up how my investments did the day before. It took him a while at first because of all those abbreviations and the small type, but he wrote them all down, and we followed them daily.

I didn’t really care, but it gave him something to do in the summer months that involved brain work. Then I had him follow the baseball stats for the Houston Astros. Those were some easy years. He just looked for the lowest numbers.

There were good years also. I’m a huge Astros fan, and even a bigger one when they are winning.

But back to stocks. There are similarities between gambling in a casino and on the stock market, but the odds are better in the market. Those of us without a whole lot of money to lose like to have a little more security than pulling an arm and watching the fruit roll by. That has never worked out for me that well, anyway.

I don’t worry about the number of points the market loses or gains on a particular day. I want to know the percentages. That provides a clearer picture.

I turn on the business channels for entertainment. I don’t pay much attention to them. It’s like watching the first three quarters of a basketball game.

When the market starts nose-diving, don’t look at your stocks. I don’t even want to know how much I’ve lost because it’s just a paper loss. It doesn’t become real unless I cash in my chips and walk away.

Each time the market has tanked I stayed put and was rewarded for it. The rest is being handled by the nephew. Writers don’t make very good investment experts. That’s the kid’s job.

He’s not a kid anymore, though. But I’m still a writer.