Handshakes, Peloton, and Stocks

The Covid pandemic has definitely altered our lives. We are just not sure in which way and for how long. Early on, for instance, handshakes were thought to be a thing of the past. But handshakes appear to be a custom as resilient as the virus.

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Does Inflation Mean Your House is Not Fully Insured?

We can easily see the effects of inflation at the grocery store and gas pump. But inflation impacts so many other aspects of our lives as well, including homeowners insurance.

Most houses are insured with replacement coverage, which means that the policy pays for how much it would cost you to replace your house and personal property. Homeowner's policies typically have a coverage limit -- the maximum amount the insurance company will pay.

The recent spike in housing costs, such as building materials and labor, may mean that your policy is inadequate because the coverage limit is lower than the replacement cost. You could be stuck with the difference in cost if damage to your house occurs.

While you are reviewing your homeowner's insurance, don't forget the "80% Rule." As Investopedia puts it: "The 80% rule means that an insurer will only cover the cost of damage to a house if the owner has purchased insurance coverage equal to at least 80% of the house's total replacement value."

So give your insurance agent a call and make sure you are sufficiently covered.

Musical Treat

The obvious choice -- Talking Heads and "Burning Down the House."

Embracing Anxiety

In a recent podcast, the comedian Bill Hader admitted that he, like most performers, gets anxious before going on stage. He learned, however, that trying to ignore his anxiety and calm himself down does not work. Instead, in those moments, he acknowledges his anxiety and gives himself permission to feel the way he does.

Similarly, we often become anxious when the market takes a sharp drop. Trying to adopt the adage "keep calm and carry on" doesn't always work.

That's not to say we shouldn't put the recent market behavior in context. In just the last decade, the stock market has experienced declines of over 10% on five separate occasions -- 2015, 2016, 2018, 2020, and 2022. It also helps to remember that you have a long-term plan and that sticking with it is typically the best course of action.

But what to do with that lingering anxiety? In an article in Morningstar.com, columnist Sarah Newcombe suggests that we turn our anxiety into excitement for the opportunities that a down market affords. She cites a study where people were asked to reappraise their emotions prior to performing a task that made them anxious. Participants were told to say one of three things -- (1) I am calm; (2) I am excited; or (3) I am anxious.

The group that told themselves they were excited performed the task the best. "[T]he people who got excited didn't feel less anxiety, but they did feel more excitement, and that positive emotional charge boosted their performance."

The reason for this is that the physiology of excitement is so close to anxiety that it helps people make an emotional shift to a more positive attitude. Newcombe likened this to substituting her fear of roller coasters with the thrill of a new challenge. (Maybe not the best analogy for an article on investments.)

So if you have trouble remaining calm, try to embrace the excitement of the opportunities the moment presents to better equip yourself to handle the road ahead.

Musical Treat

The lesser-known New Wave group The Housemartins had numerous great, catchy tunes, including "Anxious."

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