The U.S equity markets are making new all-time highs. Of course at one time the Dow Jones Industrial 30 had an all-time high of 200 then 1000 then 2000 then …….18,000…then????????
Some investors are considering moving their money out of the stock market. Because the markets are at all-time highs. The market has to go down because it is at an all-time high.
Since no one can predict the future, this is a huge mistake.
You must decide if you are a gambler/speculator or an investor. Gamblers believe they can out guess the market and avoid all losses. The gamblers have proven numerous times to be wrong, in the long run. One may get ‘lucky’ but no one can consistently market time.
In markets like these diversification is your buddy.
Proper diversification spreads risk across various asset classes with varying return characteristics or dissimilar price movement. Simply said: they don’t do the same thing at the same time.
The NFL season is quickly approaching. Teams are full of optimism about the future season. Every team says ‘This is our year’.
Being a Green Bay Packers fan I am very optimistic about this year. We appear to have all the ‘pieces’. The Packers appear to be well diversified.
The Packers are fortunate to have had two great quarterbacks in a row.
Can you imagine a team that put most of their money into one great player?
Even with these great players it takes a full team to win. Can you image Aaron Rodgers or Brett Favre without an offensive line or a good running game or receivers or….? Can you imagine the result if your team had a great offense but a poor defense?
All consistent winning teams have a diversified collection of players. All working together as a unit.
Can you imagine a team that based its decisions on the emotions of the fans? Fans are great but they make emotional decisions with no plan. There would be chaos.
Without a good coach teams would make many emotional decisions during game time. Granted there are times this approach would work. But long term it is a recipe for disaster.
Those of you which are my clients own portfolios which are professionally diversified and rebalanced much like the large pension funds.
Over time these portfolios will help you successfully accomplish your investment goals.
There will always be someone touting a ‘new’ strategy that will protect or insulate you from the current risks.
These Wall Street bullies want you to believe they can predict the future and earn you stock market returns with Treasury bill risk. What you end up with is Treasury bill returns and stock market risk.
Find an investor coach/fiduciary adviser who will help you build a prudent diversified portfolio designed for you. And more importantly keep you disciplined during both up and down markets.
Process (diversification) and discipline will lead to a successful outcome.
To succeed in investing you must own equities….globally diversify…..rebalance.