There has been a never ending, stream of financial news regarding the, trade war with China. First, we raise tariffs because we believe it makes for fair trade. Then China reciprocates and raise tariffs on the goods we buy from them.
What should we do, going forward, with regard to our investments? Should sell everything and go to cash or buy gold? This would be a mistake.
During times like these there are a large number of ‘experts’ making predictions about the future. These predictions are for the most part worthless. Of course, one or two will be right. The problem you have is you have no idea which ones are right, this time.
These ‘experts’ want you to believe they have the skill to predict the future. Unfortunately, for investors this is a matter of luck and not skill.
The free markets are more powerful than any political agenda. These free markets will find a way stabilize and begin to grow.
There is a method to help us get through these difficult times. Just as you would never take a long-distance car trip without a map or GPS, you should never buy any investment without an Investment Policy Statement.
My GPS includes Modern Portfolio Theory, the three-factor model and the Efficient Market Hypothesis. Two of which have won the Nobel Prize for economics. The third was written by a Nobel Laurette.
This is a written document that states the goal of your portfolio, how much risk you will take, and what you will and won’t do when markets become volatile and crash.
I find it curious that crashes of the past are seen as buying opportunities. And current and future crashes are seen as risk.
Remember downturns happen. However, they are unpredictable and random. Attempting to time the market will lead to very disappointing results.
To succeed in reaching your long term financial goals you must own equities…..globally diversify….rebalance.