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It was my sister Brenda’s birthday and her husband Jim, my daughter Hillary, and I were driving to meet her and the rest of my family at a restaurant on Maui. We were more than fashionably late because Jim had been practicing, and that was something he never rushed. He also was in no rush to get a card, so he picked one up at the last minute. Being his usual mischievous self, he gave it to Hillary, who was about 10, to write a note as if it was from him, with the instruction to “Write something mushy.” Being a kindred spirit with Jim, she agreed. The rest of the drive she dutifully worked on the task, occasionally stopping to ask how to spell a word – like “beautiful,” “special,” and “gorgeous.” 

The restaurant was on the ocean in downtown Lahaina. It was typical of many of the restaurants with at least one wall open to the air. I remember remarking, “you could not set a better temperature and humidity.” It was a perfect night. After dinner, Brenda opened her presents and read her cards. When she got to Jim’s card, her smile turned to a wide grin as she read it. When she finished, she looked up and said to him “That’s so sweet, but it isn’t your handwriting.”

Hillary and Jim were quite a pair. They were like twins - 45 years apart in age. They both seemed willing to try anything and do everything. I don’t know what Jim was like as a child, but Hillary was one of those kids who never learned by being warned or watching someone else’s mistake. She had to “do it” before she “got it.” She was the last of our three girls. Before she was born, people used to ask us how we did it – we were perfect parents. Then she came along, and no one ever asked us that again. She was always sweet, and she turned out fantastic, but she drove us crazy in the process.

“Insanity is hereditary. You get it from your children,” is a Sam Levenson joke. It’s funny – because it’s true. “Parenting is emotionally and intellectually draining… and any parent who says differently is lying,” confirms the Association for Psychological Science. Psychologists tell us that all this stress “translates into behavioral changes, loss of memory, inability for decision-making, and attention problems.” In other words, the stress of parenting makes us crazy, forgetful, stupid, and distracted.

The stress of stock market volatility seems to have similar effects. Somehow, psychologist Daniel Crosby quantified the impact. He concludes “The average investor loses 13 percent of their cognitive processing power during a period of financial duress." According to a Newsweek article, the stress of recent market volatility may be even worse because, “it involves fear not just about your money, but also fear about your health and the health of people you love. That adds an extra layer of anxiety." 

It’s a cruel quirk of nature that crazy markets make us crazy when it’s a time we most need to be sane. The Newsweek article – How to Stay Sane in a Crazy Market – stresses that somehow, “you have to steel yourself to ride out the periods when prices are slumping or, worse, plummeting.” One way of doing this, says Morningstar’s director of personal finance, is to differentiate “between volatility—that is, the short-term ups and downs in stock prices—and the threat of falling short of your savings goal because you didn't invest in assets that would earn the most in the long run.”

Thinking long-term is required for both investors and parents. Focusing on some of the nerve-wracking things our daughter did could have driven us crazy. But stepping back and thinking sanely, we could see that she was an important part of our family. I assume Jim’s parents felt the same way. It is also true for stocks. Despite the short-term volatility, the higher long-term returns stocks provide are essential for financial success. The real risk isn’t the short-term volatility of mischievous markets. It’s the craziness of volatile markets driving you crazy. So, you need to stay sane, even though markets are in no rush to act sane.