Many investors believe that there is someone, some advisor, some investment manager, or some brokerage firm that will have the ‘answer’ to beat the market. Finding the ‘answer’ will allow them to save less and earn more to achieve their long term financial goals.
The sad truth is there is no substitute for a sound savings strategy combined with building a prudent portfolio which is aligned with you goals and tolerances. There is no substitute for designing this prudent portfolio and remaining disciplined to that strategy.
Do not expect to predict or forecast stock prices and movements.
Do not expect to pick winning stocks and beat the market.
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.
Remember there will be another ‘crash’ or ‘bear market’ but no one can tell you when and how much.
Also, when building a prudent portfolio. There will be times when your portfolio underperforms and perhaps for extensive periods of time. In 1999 the stock market was averaged over 25% return for the 4 previous years. But then came 2000 and 2001, the market crashed, and investors lost big time.
The reason? Investors were overloaded with the hot asset class or the hot stocks.
Investors with prudent portfolios fared quite well. And over the long term out performed.
Remember the Wall Street bullies want you to continue to search for the ‘answer’. These bullies make money on every trade whether you do or not.
The stock market is the greatest wealth creating tool ever created, IF properly used. The main ingredient is that it does require discipline.
To reach your long term goals you must own equities….globally diversify….rebalance.