Mr. Toad’s Wild Ride was a 1955 opening-day attraction at Disneyland, as well as one of the original rides when the Magic Kingdom opened in Florida in 1971. It wasn’t classified as a thrill ride, nor was it a slow leisurely adventure. The ride would make sudden sharp turns, or race full speed toward an obstacle, which would inevitably slide to the side at the last minute.
Sounds kind of like Washington and Wall Street over these past two weeks, huh?
Since Washington debt debates and downgrades are already old news (investors have short memories), let’s look at Wall Street’s movement in last week’s stock market. The Dow Jones Industrials survived a historic run of 400-point days. This widely followed investment index closed, either up or down, more than 400 points, four days in a row. While September 2008 gave us a 777-point drop followed by a 485-point rebound, never have such point fluctuations been seen back to back to back to back.
Each day was in response to raging emotions, a little bit of fact and several fear-mongering rumors. Investors (true long-term investors) have no room for emotions, should take time to digest the facts and should never trade on rumors. For the record, the Dow finished with another triple-point gain on Friday, and a relatively tame 1.5% loss for the entire week.
While Washington leaders may act like the cartoon adaptation of Mr. Toad, Wall Street should not. Why? Because there is clear data to refute a double dip: Jobs are being created (though slowly), the Thursday unemployment numbers bore that out, and in spite of a Consumer Sentiment that plummeted on Friday, retails sales were up. Since those data points seemingly contradict one another, I can only image the phone pollsters speaking to the lady of the house who is indicating her concerns about the economy, as her husband is unloading the minivan with bags from Target. Consumers may repeat the doom and gloom heard from the media, but their actions are more powerful than their words. Consumers are spending more.
With corporate earnings on the rise and stock valuations at levels not this attractive since early 2009, we don’t see now as the time to run for cover, but instead, an opportunity to find 
solid companies to invest in for the long run. Where is this opportunity? Exchange-traded funds (ETFs) such as the SPDR (Standard & Poor’s Depositary Receipts) S&P Dividend (SDY), which contains 60 companies with solid dividend track records, have been beaten down in recent weeks. If long-term investors can ride out the near-term ups and downs, they can be rewarded with a dividend above 3.3%. There are also numerous individual stocks for investors wanting to curl up with a cup of green tea and their favorite spreadsheet.
So, for your sanity, avoid the economy headlines. And if TV is a must, watch Looney Tunes reruns instead of Sunday morning talk shows — the contents are equally ridiculous, but Bugs Bunny won’t make your blood pressure rise.
(Investments mentioned in this article are for informational purposes only and should not be viewed as specific recommendations. We are currently long SDY for some clients)
D. DRUMMOND OSBORN, CFP, is President of OSBORN Wealth Management, a LaPorte-based registered investment advisor firm focused on retirement planning and conservative investment management. He and his partner, Robert Laura, have been quoted and featured in the Wall Street Journal, USA Today Weekend, Smart Money Magazine, and numerous other local, regional and national publications. For comments or questions, contact Drummond at 1-800-889-7401.
