Taken Your Temperature Lately?

Taken Your Temperature Lately?

When our 28-year-old daughter, Caitlin, was just four months old, my wife and I noticed she was running a fever. We had been parents for exactly four months and began to get nervous about it. We had no parents handy to discuss what we should do. No one to calm us down.

Of course we gave her some fever-reducing medicine, but we couldn’t help getting more and more worked up over her elevated temp. Panic began to set in, and off to the emergency room we went. When the doctor on duty saw us and examined Cait, I remember vividly that he soon became less concerned about her condition than about her parents’ demeanor. “What the heck is going on here?” I thought. “Don’t look at us, treat our fever-ridden daughter!”

In reality, this wise ER doctor recognized what newly minted, panicked parents looked like. They looked just like us! He turned away from Caitlin for a moment and asked us to please sit down. We did, and he began to explain that fevers in children were very common and that parents simply cannot (should not) run to the emergency room every time their child has a fever.

“Yes,” he counseled, “when a fever is exceptionally high, go to the emergency room.” But, he explained that fever is useful as a defense mechanism as the body’s immune response can sometimes be strengthened at higher temperatures. A fever can be an indication that the body is fighting an infection, but normal body temperatures vary depending on many factors including activity level. It was a cold December night, and the fact that we had wrapped her up in a warm, one-piece snuggie and heavy overcoat with the heat in our car on its highest setting made things worse, not better.

We left the ER that night greatly relieved and somewhat embarrassed. We had obviously overreacted. It turns out that Caitlin’s fever was actually low-grade by almost any measure, and by the time we got home it was nearly imperceptible. We were parents who had gotten way too worked up, and ultimately caused Caitlin (and ourselves) a lot of unnecessary stress.

We learned some truly valuable lessons that night:

        1) Don’t panic: A trip to the emergency room is not the first step to be taken when a child appears sick.          Take a deep breath and assess the situation. Things are probably not as bad as they seem.

        2) Fevers are normal. They are to be expected in young children. Pay attention and monitor the                         situation, but don’t jump to the wrong conclusions.

        3) Don’t alter everything because of a temporary situation. Caitlin’s fever was not really very high, but               to us it seemed life threatening. It wasn’t. It was temporary.

The lessons we learned that night were life lessons that I have found to apply to many other situations. For example, the stock market and your portfolio have backed up a few percent in the last month or two. Let me say this about that:

        1) Don’t panic:  When Caitlin’s fever showed up, we overreacted big time. When market reversals show          up, investors tend to overreact. When that happens, they make bad decisions.

        2) Downturns are normal. Markets go up and they go down. They never go straight up. It is not only               normal, but it is also healthy for markets to go through periods of decline. These periods “wash out”             the market timers and amateur investors who do panic.

        3) Don’t alter everything because of a temporary situation. Successful investors avoid making                           long-term decisions based on temporary conditions. Though downturns can seem like they’ll never               end, they always do. Downturns are temporary.

So, we find ourselves in a temporary pullback once again. It has been awhile since we have had to deal with one, and it is a little disconcerting, but Q3 was a losing quarter largely because of just three asset classes:

* Foreign markets, as measured by the MSCI EAFE Index, lost 5.88%

* Small cap, as measured by the Russell 2000 Index, lost 7.36%

* Commodities, as measured by the Goldman Sachs Commodity Index (GSCI), lost a whopping 12.46%. (Source:  Bloomberg)

Remember this: Your account is invested in a sophisticated, diversified portfolio of many asset classes that by design will not “walk in lock-step” with one another. By not walking in lock step, we mean that in any given timeframe, some asset classes will be up and some will be down. This is the essence of our strategy, and it is the essence of diversification.

Remember this, too: We are on it…every day, all day.

Mike Booker

Mike Booker

Mike has enjoyed meeting with existing and prospective clients over the years, helping build Financial Synergies into the firm it is today. He counsels clients on many complex areas of financial planning and investing, helping them to achieve their long-term goals and simplify their lives. Mike has earned three top-shelf credentials: CERTIFIED FINANCIAL PLANNER™, Chartered Financial Consultant® and Certified Fund Specialist®.

 
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