There is never a shortage of predictions on where the markets will go next. These predictions are typically based on current events.
Who will win in Washington DC?
What will happen tomorrow….next week….next month…..next year……?
Will the stock market crash? When should I get out to avoid losses?
Should I buy gold and when?
Will inflation take hold? Or is deflation around the corner?
And the list goes on and on…
The talking heads on television need these predictions to keep viewers watching, which in turn increases advertising revenues.
Everyone wants to know what will happen next. In many cases, we make emotional decisions based on the latest short term predictions. These decisions will in most cases result in very disappointing performance.
If you wish to succeed long term in reaching your financial goals, you need to develop a prudent strategy and remain disciplined to that strategy. Most important you must have realistic expectations.
Proper expectations are the key to investing with Peace of Mind.
Do not expect to predict or forecast stock prices and movements.
Do not expect to pick winning stocks and beat the market. In the long-term stock picking will lose.
Do expect to achieve close-to-market returns over time and to see daily, weekly and yearly volatility. Reduce your costs, use diversification, and sit tight. If you expect the impossible you will be frustrated, unhappy and fearful.
All of us would like to get rich quick. However, if this is your strategy, odds are you will be very disappointed. As I mentioned earlier, develop a lifelong game plan and stick to it. The only adjustment you should make is to gradually become more conservative as you get older.
To succeed in reaching your long term financial goals you should:
Own equities….globally diversify….rebalance.
Leave the predicting to the talking heads and if you do watch see it as entertainment, not strategy.