We are experiencing a great equity market up turn with virtually no end in sight. Many in the financial field are predicting an overdue downturn. There is no doubt that there will be a downturn. However, no one can tell you when.
(I wrote this in 2018…so here we go again) We experienced a good up turn and lately we are realizing some negative volatility.
Wall Street prognosticators are trying to do is strike fear into the investing public. These Wall Street bullies are looking for an increase in trading. These bullies want you to move your money from one asset class to another.
Remember they make money on every transaction, whether you make money or not. Even though most brokerage now offer zero-dollar commission. These brokerage firms make money on the bid/ask spread. Please call if you would like this explained.
Wall Street has a product for every situation. And they know the investing public is constantly searching for the next big ‘thing’.
Investors’ real goal is stock market returns with Treasury bill risk.
This is unattainable. Remember, where there is no risk there is no reward. This is true in all other areas of our lives, not just the stock market.
The most successful investors of all time have one strategy, a strategy that does not always look great, but over time leads to success. These successful investors are not always looking for the next great strategy. At times they will look like they do not know what they are doing. These successful investors know risk is unavoidable.
It has been proven time and again that market timing DOES NOT work, at least not consistently. Not only must you be right getting out of the market, you must also be right about getting back in. Research has proven that this is NOT done consistently.
I find it curious that investors see past ‘crashes’ as buying opportunities while current or future ‘crashes’ are seen as risk.
So if you want to keep control of your money and earn good market returns you must live with downturns. Because with downside volatility there is the upside volatility.
There are ways to control your risk while earning good market returns, long term.
Of course, you will be tempted to concentrate on the hot strategy or asset class. But remember the large successful pension plans focus on controlling risk. They know that controlling risk will lead to success long term.
Investing for a long-term goal such as retirement requires patience, a prudent strategy and discipline. This, in most cases, requires the assistance of a good coach. A good coach will guide you in following these three simple investing rules.
Own equities….globally diversify…..rebalance.
If you panic and sell you are locking in any losses you have. This is a huge mistake.
To succeed in reaching your long term financial goals you don’t need to know everything about investing, but you do need to know the right things.