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Dictionary.com offers several definitions of the word “numbed.”  One reads: lacking or deficient in emotion or feeling; indifferent.

In a directly related event, U.S. stock exchanges closed up yesterday at levels that would previously been associated with words like euphoria and exuberance.  Interestingly, yesterday's 4% (and then some) increase in the equity markets just doesn’t create the good feelings it once did – primarily because all of the ups and downs have essentially left us where we started a year ago.

The chart below shows the movement of the S&P 500 (as represented by the SPDR S&P 500 ETF Trust) over the past 12 months ending with last night’s close.

Roller coasters are fun because they pick you up and drop you off at the same spot with, if things go as planned, no harm done in between.  Inviting fear within the confines of safety is, as long as you’re at least 48 inches tall, fun. 

No one should ever confuse the stock market with safety.  It is, and always has been, a roller coaster ride.  What has changed, particularly recently, is the velocity and topography of that ride.  Attempting to get off at some arbitrary point during the ride has always been considered a bad idea unless luck was on your side.  With today’s levels of volatility, an arbitrary entry or exit can have significant impact in the short term, and potentially the long term.

Ironically, with all that has happened over the past 12 months, this portion of the market is essentially back where it started a year ago.  All of the 2 – 4% declines and upticks have numbed investors to volatility, while gradually creating the impression that the battle is being lost.

The ability to tune out short term gains and losses is probably a good thing for a long-term investor.  If, however, that numbing process ends up creating a feeling of despair, particularly if those feelings create the impulse to arbitrarily leap out of existing investments on a given day, it might be better to take a step back and recognize that investing is indeed a roller coaster.  The extreme highs tend to come just before, or just after, the extreme lows.

Those who can’t handle the whipsaw action of the equity markets have a number of other places where they can hop aboard.  There is absolutely nothing wrong with making 3% year-after-year on the Ferris wheel, as long as you recognize that you might have to contribute substantially more for every ride to even have a chance to build a retirement nest-egg.

Nobody rides for free.

Disclosure: Cobb Retirement Solutions, LLC does not sell securities.  The information presented here is for informational purposes only and is not in any way a recommendation to buy or sell a particular security.  Past performance is not indicative of future performance.

Marshall J. Cobb, CRSP, is president and founder of Cobb Retirement Solutions, LLC., an independent, fee-only firm offering qualified plan analysis and oversight exclusively to corporations and organizations. Cobb’s first-hand knowledge as a veteran representative of retirement plan vendors beginning in 1990 gives him a unique perspective as he advises his clients.  Cobb runs his office -- based in Houston, Texas -- with employees and clients across the country.