Leonhardt on Why Market Losses Shouldn't Rile the Young

David Leonhard pens what some other blogger termed a "delightfully contrarian column." Damn right. Leonhardt notes that applauding every rapid rise in the stock market - and bemoaning every decline - is somewhat senseless for people at the beginning of their investment life-cycle (e.g. the young).

Assuming that asset prices cannot climb ever upward at a fast pace, the optimal path is for asset prices to appreciate in an orderly, predictable fashion. From the perspective of a young person in the first ten years of contributing to her 4o1(k), better to have the market increase each year rather than have a massive run-up in the early years (when she won't have as much invested), and then be stagnant for nine years. Though we all want stock markets to rise, for a young person it's better for the bulk of that rise to be concentrated in later years when we have more invested.

Thus, fear not when Jim Lehrer reports the S&P to have a flat day. Just more time to pile in your investment monies before the market swings up again!