The fact is we don’t know what is going to happen with the stock market in the short run. Investors are best served to take a long-term approach when investing in markets that go both up and down in the short-run. Economist and financial experts can form educated opinions and the rest of us can have a feeling or a guess; but that is all it is - an opinion, a feeling or a guess. We simply don’t know what tomorrow’s market will bring.
So many were convinced that if the Presidential election went to Joe Biden, the markets would quickly unravel. In fact, just the opposite has occurred over the last month. To be fair, the election result may not be why the market has rallied recently or may only be part of the reason. The markets have been pretty excited about the news of promising vaccines that appear to be on the way very soon. That is the point, whatever issue you think will make the market go up or go down is only part of a large equation of information being digested by the markets.
To further make my point, I’ve attached an excerpt from City National Rochdale which details many different Economic Indicators looking forward three to six months. As you will see, there are many factors that the market is weighing each and every day. Over longer periods of time, ten years or more, and assuming a diversified portfolio, the markets have gone only one direction, up. I’m very confident that over the long-term this will continue to be the case, despite what your gut thinks, believes, or feels about the short-run.
I hear this all the time, “I’m getting older close to retirement, maybe I don’t have long-term to invest any longer.” That may be exactly right. If you have reached a point in your life where you need to start reducing risk, you absolutely need a game plan. Most likely that game plan could include a variety of different assets with varying degrees of expected risk and return. In fact, most investors are all or none when it comes to market risk. If you don’t feel like you have a framework or an investment plan that matches up with your life stage or financial goals, let’s talk soon.
As always, we hope you find the Weekly Market Review both informative and interesting. Have a great week!
Trevor N. Coe, CFP®