We are both, at SSWM, trader and investor. Tend to love the opportunities that trading in a choppy market provides, but dread the anxiety that declines of 5% plus can bring. We trade based on value with the end goal of generating income and building wealth.  If we find value in stocks that are oversold, that's like buying a company on sale. Everyone loves a good sale, an opportunity to get things at a reasonable discount. If things appear a little overbought, take some profits and have dry powder ready when a decline indicates a value you are willing to pay that price for. Behavioral finance would indicate, as we have written on multiple occasions, that people sell on fear at the bottom and buy on greed at the top. Completely losing track of the market drivers: Markets correlate with the direction of earnings, earnings are driven by economic activity, economic activity is driven by the slope of the yield curve, yield curve driven by Fed interest rates, Fed interest rates driven by rate of inflation.

 What drove the most recent decline of the S&P to a low of 1,820 last week, a retreat of 9.8% from the September 19th all-time hight of 2,019? Fear of a global economic slowdown and the possible Central Banks reaction, falling oil prices and ebola. Could any of these concerns have real merit and impact future earnings? You have to asses the data quickly and make decisions based on your findings. Trade on the emotions, build wealth on the facts.

 And when the S&P recovered to close the current week at 1,964, what was the driver? Global economic slowdown and the possible Central Banks reaction, falling oil prices and ebola. Looks like the Fed will be a little more dovish, including delaying the end of QE and pushing out any intent on increasing interest rates. Oil has stabilized after recent declines that had some speculating it could drop to $30 a barrel. We seem to be beginning to feel more at ease with ebola. It has become part of our daily life. A new case develops, someone is quarantined, the media shows pictures of a car wrapped in plastic, patient recovers, we forget. More people will die of the flu this season, that's a real concern and blow to productivity. 

 Did we learn anything that will quell our fear and greed? Probably not. We do know that stocks do not go up forever. Corrections, or declines, are healthy for the markets. They provide a cure for complacency, keep us on our toes, keep us humble. Large selloffs have historically provided a baseline for moves higher. Corrections keep us on point and remind us to revisit the data, how are company earnings, how is our economic health? 

 Statistically, we should expect a slide about every 18 months. If we go over that timeline, we should test our tolerance for a drop. It has been over 36 months since the last correction (a decline of over 10%). Quick drops are typical in a rising bull market. Bear markets, declines of 20% plus, usually decline at a more gradual pace. Bear markets are dressed in complacency and/or wild hysteria and euphoria. One huge driver of markets is any comments, or change, on monetary policy. Know the Federal Reserve, listen to what they say and read what they write. Are you going to panic at the next 5% drop, cash out, run for cover and look for alternatives? Sua Sponte.

 When you think of a person's wealth, you don't think of the million dollars that they have in the bank, you think of the million dollars that they have spent. Most people are confused between the appearance and the reality of wealth; trappings of wealth and actual wealth.

 It may be the house, it may be the car, it may be the job, but often wealth is about what you don't see. At SSWM we feel that value should dictate the way we view the world. In the wealth and investment world, it is about value creation.

 Success, and wealth, has nothing to do with the house you live in or the car you drive. Life will have more ups and downs, challenges, disappointments and elation. Through continuous learning, increased knowledge, thinking for yourself, developing good habits, focusing on the long term, and trying to have fun on the path, that should be the ticket to managing wealth, and happiness, in your lifetime.

 Sua Sponte Wealth Management is not just about money and how you manage it, but it is also about creating value in all the things you do in life. There are six essential aspects of wealth that will bring you happiness in life:

1. Physical Wealth: You need to be physically healthy to have the energy to engage in life. If you don’t have a baseline of health you can’t function and can’t be successful. Health care is extremely expensive and getting more so.
2. Mental Wealth: You need to be continuously engaging your mind. Learning and growing, experiencing new ideas, getting better, getting wiser, pursuing mastery, and putting your ideas to work to accomplish your goals.
3. Emotional Wealth: You need to be self-aware emotionally, feel good about yourself, and have a positive self-image. If you are depressed to the point where you can’t function you can’t be successful.
4. Social Wealth: You need positive relationships in your life and people that love and support you. You have friends and loved ones that you trust, that make you a better person, and inspire you to be better. There are people you can call at any time of the night if you have a big problem. Humans are social, if you don’t have people you care about and that care about you can’t be successful.
5. Purpose / Meaning / Spiritual Wealth: You make a positive impact in others’ lives, giving meaning and purpose to your work and daily life. This keeps you focused and inspires you to overcome the day to day struggles and setbacks that are a part of everyone’s life.
6. Material Wealth: There is a basic level of food, shelter, and clothing that all people need and that is paid for through money. If you are too poor or have too much stress from struggling financially you can’t be successful.

 Over the long run, investments in housing do not return much above the rate of inflation.  The stock market has performed better. You are better off renting and putting that 'purchase' money into stocks. Cars fall into that same category, or worse. Cars are for transportation, for getting from one location to another safely and reliably. A home is for living in, for security, for raising a family, not for speculation on housing prices. When you mix the two, horrible things can, and will happen. Remember 2008?

 Some material things do make my life more enjoyable. I do enjoy the MacBook Pro I write this column on. It is connected to more music than I could enjoy in a lifetime and a wealth of global educational information. Having my son in the best football helmet that money can buy, does make watching the game more enjoyable. I like to write and I like to write with a fountain pen, I will spend a little extra for a fine writing instrument. Oh, sunglasses, I do like a nice pair of Ray-Ban's. For the most part, I'm not real big on accumulation of material possessions. In fact, I think I'm two generations behind on my iPhone upgrade.

 There is no doubt that there is great psychological satisfaction in spending money on nice things. The way to make ends meet is to spend money you have, and to not spend what you don't have. The way to build wealth is to not spend money you have. The decision is an easy one, do you want to build wealth or buy things?

Do you want to spend a million dollars or be a millionaire? Sua Sponte.