You Can’t Predict The Weather But You Can Predict Its Affects

Well, it snowed out here again today. I know it’s still January, but with the weather being so warm the past few weeks, even as high as 50 degrees (!!) I was unpleasantly surprised to wake up to snow this morning. I don’t mind looking at snow, but driving in it is another story.

I hate driving in the snow because while you can’t predict when it will snow (“there will be a 50% chance of snow”…yea thanks Weather Man) you can perfectly predict what will happen when it snows; dozens of people freak out, drive just as fast as they normally do without snow, slam on their breaks, drive like idiots and cause accidents.

I can understand if you’re from out of state and have never driven in the snow before (and have completely no common sense) but when Utah sees at least a dozen BIG storms that cause low visibility, loss of road traction and snow plows aren’t deployed until the mid-afternoon, you better bet that when you drive, you will need to drive as if you know that ice is slick, snow falling causes you to have to pay closer attention to things, and you need to drive slower and break early. But that seems to allude the majority of drivers here and every year on heavy snow days there is accident after accident, and it’s so predictable that I’d bet money on it.

But this year, a coincidence caused me to connect the dots between the Utah snow fall and other things, more financially geared.

The stock market is a lot like Utah weather, volatile, unpredictable and dangerous. We all know the market fluctuates and you can’t predict in what way it will fluctuate, but you can predict one thing; when it fluctuates, people freak. You just have to make sure that those people aren’t you.

Get your snow tires ready

In snow and bad market climate, you need to be prepared to travel through the storm. You still have to travel in the snow and your money will still be in the market. Life still has to move on as normal and you have to adjust to the current climate.

Slow and steady

In the snow, you have to adjust your speed. You have to drive slower to make sure you stay on the road, you have to break early so you don’t rear-end someone and you have to keep the wheel as steady as possible so you don’t spin out or slide into other lanes of traffic.

When you’re investing and the climate takes a dip, you need to act in a similar manner. You need to continue the plan you set forth when you first started investing, but be cautious. You can’t just make a sharp turn and veer off course or make a snap judgment about where the market may be in the coming months or years, and you shouldn’t just abruptly stop what you have been doing. You made a plan for a reason and even if the market as a whole is taking a little dip into bad weather, your plan is most likely still a good one and if you stick to it, you’ll come out ahead. Most investors that lose money in the market do so because they let the emotion of the current economic climate alter their trading plan and they sell or buy when hype tells them to rather than sticking with their plan.

You know where you’re going

Even with bad visibility, you know where you set out to go. You have a destination in sight and you know how to get there. Hold tight to that plan and stick with it. Be cautious of others on the road who would have you change your plans because the climate is bad. The weather won’t be bad forever and when the sun is glinting off your cool million on a sandy beach somewhere in the future, you’ll be reminded of your sharp decisions in the snowy weather.

Are you able to keep your cool in bad weather?

Image by kittell

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4 People have left comments on this post



» Jeff @ Sustainable Life BlogNo Gravatar said: { Jan 25, 2011 - 01:01:50 }

Ah, the weather rant post. I find that slowing down helps quite a bit, and also road time. You start to know the conditions, hazards and can kind of game out how people will react – here they just go painstakingly slow for no reason.
One thing that I’ve found helps is having a standard transmission. No worry about slipping or going too fast down hills. (Also, it’s not snowing here, but given that you’ve got snow, I have a feeling some is coming our way)

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Jesse MichelsenNo Gravatar Reply:

Ya expected this one huh? 🙂 I don’t find it all that difficult to NOT crash in the snow. I test my brakes on each road surface I get on so I can gage how long it will take to slow down, and what my car does when I hit the breaks, I drive slow, pay attention and mostly, watch out for other drivers. Every Winter our ditches on the side of the freeway fill with cars, I can’t help but laugh sometimes…

(Sorry to send it your way but I can’t say I’d keep it if I could!)

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» MoneyConeNo Gravatar said: { Jan 25, 2011 - 03:01:18 }

Loved the analogy!

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Jesse MichelsenNo Gravatar Reply:

Thanks! I figure I have to express my rage constructively 🙂

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