As I write this the Dow Jones Industrial 30 has pulled back 4% off its all-time high. There are many pundits saying ‘I told you so’. Some even say this is only the beginning.
This is where your investor coach earns their fees. This is where your coach keeps you disciplined to your strategy. This is where your coach prevents you from market timing. That is, getting out of the market now and buy back in when things ‘settle down’. Or when things look good.
Someone always has a strategy that just fits this particular situation. You should be doing this….or this….or this… These are all marketing gimmicks. Because these brokers give you the impression that they can predict market movements. Both up and down.
These are the Wall Street bullies I have been writing about for some time now. Your coach will keep you from falling victim to these bullies.
Keep in mind that these bullies cause what I call ‘musical brokers’. When their hot idea fizzles out the investor moves to the next broker with another hot idea.
When one of these bullies tells you they knew the market was going to go down. Ask them this question, Did you buy put options or sell the market short? In fact there are ETFs on the market called 3x bear. In other words if the market is down 4% these ETFs will increase 12%.
If these bullies knew the market was going to go down they would have mortgaged everything they owned and bought these ‘3x bear’ ETFs.
The truth is the markets are far too efficient to take advantage of over any extended period of time. Of course, there will be someone lucky enough to get it right. They will then market their ability to predict the market movements.
There is however no correlation between their current results and future results. This not a matter of skill but rather luck.
So resist the temptation to empower the Wall Street bullies.
As an example. Donald Trump has been receiving a lot of media attention because of his controversial opinions on all sorts of subjects. He is famous for his flamboyant style. He has amassed a fortune over his lifetime. Billions. However there was a study done on his transactions. If he had simply invested in the S&P 500 during this same time. He would have amassed $10 billion more.
Keep in mind during this time the S&P500 has had numerous pullbacks of 10% or more. Yet Mr. Trump would have earned billions more just by staying disciplined during all those down turns.
Of course his flamboyant style would have prevented him sitting and earning his fortune quietly.
Your investor coach/fiduciary adviser is there to help you through all downturns. Your coach/fiduciary adviser works for your best interest not the brokerage or insurance firms.
Let them earn their fees.