Markets are Random …..Get Over It!!

I just read another article that many Americans are afraid of stocks. They are afraid they will lose all their money. Many expect to earn stock market returns with Treasury bill risk.

What they end up with is Treasury bill returns and stock market risk.

Remember there is risk in anything we do. If you leave your money in cash or CDs you take on inflation risk. In that your money loses its purchasing power.

Think about your daily expenses. Do your overall expenses go up over the years? In my case they do. In order to keep up with inflation we need to take on the risks of equities.

Of course there will be uncomfortable times. The housing crisis of 2008 – 2009 is the most recent extended down period for equities.

Many believe there is someone out there who can and does know when to get in and out of the market to maximize return and avoid all losses.  After two decades of research I can tell you this person does not exist.

You will find someone who makes a correct prediction. The problem is there is no evidence that their predictions will be correct going forward.

The people you read or hear about, regardless of their credentials, making predictions, rely on luck and not skill.

If you invest in stock markets no one can predict “save” you from the down periods—NO ONE.  If markets were not random and unpredictable, they wouldn’t offer higher expected returns.  Markets randomly and unpredictably go up and down.

If you want to invest with confidence. Ignore the short term volatility (risk) that is inevitable in the stock markets around the globe.

As we age our situation gradually changes from growing our money to taking an income stream that keeps up with inflation.

To succeed in this we must reduce the level of risk in our portfolio as we grow older.

Because we are emotional beings we need help during times of crisis. This is where an investor coach/fiduciary adviser will help you. Like any coach, they will guide you through the tough times.

Being a Packer fan right now is not easy. Our team is going through some very tough times. Is Aaron Rodgers done as an elite quarterback? Can the defense be fixed? Will our players stop turning the ball over?

Many fans are panicking, as well as some ‘expert’ media types. But with time and coaching we will endure.

We will succeed in our investing when we own equities, globally diversify and rebalance. And of course, receive coaching.

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