October 26

Coffee with Mike – Good or Bad? For the Employee

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So let’s put “is this a good thing or a bad thing” in a financial sense – let’s think about it.  The market goes down and you lose 30% of your value.  Is that a good thing or a bad thing?  Oh, that’s a bad thing.  Well, if you are an employee, it is actually a good thing, because if you are an employee, you are continuing to make contributions, and you are continuing to get agency contributions, so that means you are buying.  

When you are buying, do you want the price to be higher or lower?  Well, when you are buying, you want it to be lower. Well, yeah, you want the price to be lower, so when the price is lower, guess what?  Your balance is lower.  When your balance goes down 30%, the price just went down 30%, too.  As long as you’re not selling everything today, it doesn’t matter that the balance went down 30%. 

Don’t have a heart attack about it; don’t stress out over that.  Instead, realize that the share price is down, so your balance is down.  But if the share price is down, that means your contributions can buy more.  And the more you get, the more units or shares you get, the better off you are going to be.  When you are an employee, it is about how many shares you can accumulate, how many shares you can buy.  When the price is lower, you can buy more.  So, it looks like a bad thing – the balance went down.  It is a good thing – the share price is down and I can buy more.  Make sure you are buying more.

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