When you read a daily financial publication like the Wall Street Journal you find an enormous amount of facts. These facts can lead to vastly different conclusions. I wager that each day, with the exception of 2008-9, I can find 5 reasons the market will go up and 5 reasons it will go down. All of these facts occur in the same day.
You can justify almost any imprudent investment decision with “facts.” Information is filtered by our emotions to create “fact” that support our decisions or beliefs. Without outside guidance, it is impossible to tell when and how this happens. Truth is the field of investing is elusive.
Remember the Wall Street bullies make money when we, the public, move money from one investment to another. Your broker has a vested interest in moving your money. They make more commission each time you move. The banking system loves to feed the fear.
If you are really interested in earning a good return on your investment dollars stop empowering the Wall Street bullies. Develop a sound, prudent portfolio, based on YOUR risk tolerance level and remain disciplined to that strategy. Jumping from one investment to another will cost you money and make tons of money for Wall Street.
As I have mentioned a number of times, NO ONE can predict the future. When you ask your broker what is the best stock for now? Or, when should I get in and out of the market? Or, who is the best fund manager(s)? You are essentially asking them to predict the future.
A globally diversified portfolio eliminates the need to predict and allows you to relax and be assured you are properly invested to reach your long term goals. One of the main attributes investors need as well as advisers is discipline.
Equities are one of the greatest wealth creation tools available, if properly used. To reach you long term financial goals own equities…..globally diversify….rebalance.
Remember, if there is no risk there is no return or a very low return. Our goal is to grow at least to maintain our purchasing power. That means keeping, at least even with inflation.
With risk comes downturns. These downturns are inevitable and must be endured to realize the great returns the equity markets have to offer.
Since 1926 there have been 89 downturns of 10% or more. During this time, the S&P 500 has had an average annual return of nearly 9%.
For most if not all investors, dealing with the downturns requires hiring an investor coach/fiduciary adviser.