Investment Decision Differences
It was October 3rd and the markets had just had a challenging start to the month, dropping 4.5% in just over a couple of days when I looked at my phone to see a markets update. I had to laugh when I saw the image above that I had to screenshot. I realized instantly that this summarizes the investment & economic world we live in today. When “The Street” tells you to sell your investments, take your money and hide before everyone else realizes we are in a bear market while Yahoo Finance’s big bull tells you to ignore what’s happening because the Dow is going to 30,000 it’s hard to know who to believe. If you clicked on those articles I know they would each make compelling cases for why they believe what they believe.
These have been popping up frequently as well from Barron’s - “The Dow is Up (Down) Because…”. While trade tweets and manufacturing/jobs/interest rate etc reports certainly impact markets, that ignores the fact that there are a significant number of less easily explainable factors that go into what is happening in the markets, including on a company by company basis.
We want everything to fit into a nice, easy explanation for why something is happening. We also figure that someone has to have an actual handle on what is going to be happening next. People looking for the guru or newsletter that has “The info that the government (IRS, big banks, your financial advisor, etc) doesn’t want you to know”. We love the confident person on TV who seems so sure of his outspoken prediction that he couldn’t possibly be wrong. Those are the people the media loves to bring back on over and over again even if not always being held accountable for their often high strikeout ratio.
I know, because for much of my career I’ve been focused on some of that as well. Feeling the obligation to do the best I can for my clients I want to be able to present as much clarity & confidence as I can about what’s happening. This has sometimes led to not getting valuable insights I come across out until I can “make sense” of exactly what’s happening and what the direction is.
The fact is that we live in a complex world with a lot of moving pieces. In my 20+ years now of being in our industry, I have yet to find someone who’s got it all figured out. What I have found over the years are a lot of good resources that have been consistently balanced about the strengths & weaknesses, the opportunities and the threats to the markets and the economy. I have shared links to articles and blogs of people I trust not to always be “right”, but to be balanced in their assessments of the markets & economy. While I will continue to do that on our site, my goal going forward is to more consistently share the “interesting” articles I come across regularly that relate to things that you actually have control over in influencing your financial life, such as:
Building portfolios that use sound investment principles appropriate for your own risk & realistic return expectations.
Making smart (& sometimes difficult) decisions related to owning your household cash flow
Taking advantage of savings & investing opportunities to grow your wealth long-term
Setting appropriate & meaningful goals & having accountability to moving towards them
Tax & planning strategies that can help you accomplish those goals effectively.
If we focus on and do enough of these things right over a long period of time you will win financially regardless of whether “The Street” or “Yahoo” was “right” over the next couple of months.