Free Markets Work!

Each day the media focuses on a new prediction. Their audience is continually searching for new predictions. What will happen next? What is the new hot asset class? Where is the best place to put my money?

Everyone wants to have the best investments, only making money and avoiding all losses. This futile exercise will only add anxiety to your life.

What investors are looking for is stock market returns with Treasury bill risk. What they receive is Treasury bill returns with stock market risk.

No one can consistently predict the future. When someone is right on a prediction it is a matter of luck and not skill or knowledge.

Free markets are random and unpredictable.

Free markets left to their own devices set prices better than any individual or committee. They incorporate all of the knowable and predictable information in the present, as well as knowable information about the future.

Only unknowable future news and information can change prices going forward.

Many people believe that the executives at the large brokerage firms, banks and insurance companies have special insider’s knowledge. These same people also believe these ‘privileged’ executives make money buying and selling the right stocks at the right time. This is how they become ‘filthy’ rich.

This is not true. In most cases these executives make the bulk of their incomes off of the fees and commissions they charge you.

Rather than attempting to predict the future.  Use your time and resources to improve your skills, either career or life.

Your investments are best allocated by owning equities, globally diversify and rebalance. Follow these three simple rules and you will succeed in reaching your long term goals.

Allowing the free markets to works requires a substantial amount of discipline. Most if not all of investors are far too emotional to remain disciplined during times of market extremes.

A case in point is the recent downturn during the month of January 2016. Many investors forgot about allowing the free markets to work and sold out of their equity positions.

To guide you through the inevitable volatility you need to fire your broker/agent and hire an investor coach/fiduciary adviser.

Leave a Reply

Your email address will not be published.