My Mercedes wagon has served me very well, but its 5th birthday is coming up and I’m ready to get into a new vehicle. The new and improved safety features in today’s cars really appeal to me – especially those designed to remove some of the risks associated with backing up and parking. Friday, before slapping on a FOR SALE sign, I gave my local Benz dealership the opportunity to examine my wagon to see what I might receive on a trade-in basis.
After waiting around 15 minutes, my salesman approached, grim-faced, and said, “I’ve got some bad news for you – your car has been totaled.” He went on to tell me that CarFax reports the vehicle as a total loss, and that under these circumstances, my MB is worth half of what I expected. In a flash, I’d lost 50%.
Now, this isn’t a retirement nest egg where the stakes are much, much greater, but hearing the news that I’d lost thousands of dollars earmarked for my next car’s down payment was a shocker. In those initial moments of stunned silence, before I figured out that CarFax goofed, I got a little first-hand taste of what it’s like to quickly lose a lot of money – the way severe corrections and bear markets can wipe out years of growth in an investment account. It’s not a comfortable feeling. Glad I’m a market timer.