What do you tell yourself when, by market measures, your net worth declines by, say, a couple of hundred thousand dollars in the course of a week? (I haven't checked, but for someone my age with retirement saving it's a fair guess.)
I tell myself that all that's really changed is the median prediction for the future by a bunch of over-excitable folks who are playing Keynes' famous beauty contest game (trying to figure out who everyone else will think everyone else thinks is the winner).
In other words, though I accept the efficient capital markets hypothesis in the sense that I don't believe I can systematically make money by betting against market valuations, what's happened, I tell myself, is almost on a par with, say, the feeling a baseball fan should have if his team has a bad week in mid-August and the ESPN baseball analysts respond by downgrading the team by ten rungs or so in their weekly Power Rankings. There's arguably more heat than light to the change if you don't have to convert to cash any time soon.
Now, if only I could stay so serene about other things.
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