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Being in financial services is a constant battle and an endless feedback loop of everyone’s and their mother’s take on the financial markets. This guy is bullish because the Fed lowered rates, and this other guy actually says we’re due for an economic fallout because the Fed lowered rates.
Wait, what? Yeah. The same event, two completely different outcomes projected by two different people with likely an immense amount of street cred.
Let it be known that all-time highs are generally bullish for the stock market. Actually, if you think about it, they are about as bullish as anything can be. Additionally, all-time highs are usually followed by new all-time highs.
As Peter Lynch says, “Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves.”
This type of loss isn’t necessarily getting short-squeezed and incurring capital losses. It is a loss of opportunity, a silent wealth killer.
As of September 27, the S&P 500 had made 42 record highs throughout 2024. In 2021, the S&P 500 made record highs 70 times. Check this out for a little more information.
People (and the market) absolutely hate uncertainty. It can drive people to make some of the most irrational choices, especially when it comes to investing. Think of 2022, when Treasury Bills began yielding over 4% and people were literally selling the bottom of the equities dip for some certainty around their money.
Anyway, less is more when it comes to financial media and different strategists' market takes. I am borderline tuning all of that out at this point. I’ll pay attention to the data and allow myself to formulate my own thoughts and opinions. I follow a few strategists because I believe they give more holistic views rooted in data and history.
Another note: I generally don’t care what happens to the stock market tomorrow, next week, next month, or next year. I care about where the market will be in 20 years.
Spending time listening to and tracking everyone’s opinion isn’t even close to a good way to spend my time. Is it a good way to get me anxious, want to reposition, and be more active in my portfolio? For sure. And that is exactly what we as advisors work to stop people from doing.
As the famous economist Eugene Fama says, “Your money is like a bar of soap - the more you handle it, the less you’ll have.”
The S&P 500 has never been negative in any 20-year time frame in history. Go ahead, literally pick any time frame, it has a positive return if you give it 20 years. I’m betting we keep that pace.
A few years ago back in college, I read this book called “The Tao Jones Averages: A Guide to Whole-Brained Investing.” I used to take notes on every book I read, and this was one of them.
This book was full of amazing insights on how to mentally prepare yourself to be an investor. Below are two of my favorite notes from this read:
Wall Street is making sense of a market that has never made sense a majority of the time.
a. This one slaps. Check this out below:
The data game is a loser’s game. Most of it is backward-looking. (i.e. inflation, employment, etc.). The book compares the backward-looking data to having a scout on the Titanic. By the time they saw the iceberg, there was nothing they could do.
Ultimately, unless you’re being paid for your research and opinions or are actively trading your portfolio (which I wouldn’t recommend), the whirlwinds of data we are forced to consume are usually not productive.
Occasionally, you have to ask yourself, “Is this data or this opinion even going to be relevant in 10 years?”
If it isn’t, why allow it to impact your investment strategy? Don’t get me wrong, I have opinions on the market. I just don’t let them impact my strategy. Essentially, I am following a “watch what I do, not what I say” type of mentality. And what I’m doing is constantly adding to my long-term portfolio whether we’re at all-time highs, fresh lows, in crisis, or just calmly humming along. I’m in this for the long haul.
Have a more specific question or want to get your finances in order? Feel free to reach out to [email protected] for a free consultation!