It sure seems like there are a lot of clairvoyant financial advisors out there. It’s common to see interviews or read “insights” where advisors discuss what they “see” happening in the future. Here’s the really big news…we can’t see the future and neither can anyone else.
Acknowledging that you can’t see into the future is liberating. Without accepting this reality as an unalterable truth, you are destined to always be in search of the “perfect investment” or the “fool proof strategy.” In many cases, these adventures end up with far less than desirable outcomes.
Remove the Stress
The pure beauty of not trying to outguess the markets removes the constant drumbeat of stress that infects investors who keep trying to look into the crystal ball.
There are always worrisome events that can have a temporary impact on financial markets and toy with our human emotions. These types of events in various forms have always been a part of the markets, but these do nothing to alter the long-term permanent uptrend that should be our primary focus.
I recently attended a performing arts event on an evening after the Dow (while only 30 stocks, most commentators focus on this) declined by 400+ points. With just a single exception, everyone I talked to asked where I thought the stock market was heading. They all thought investment success depended upon seeing the future. To each I said I had no idea what the near-term future might be for the market BUT only two numbers really mattered: “54% and 75%.” That is, the broad stock market is positive about 54% of the trading days and 75% of the calendar years. The entirety of the investment equation is to avoid reacting to one so that you can benefit from the other.
Embrace the Markets
It’s an interesting juxtaposition between those investors who use “advisors” that always forecast the future versus those with advisors that embrace the markets. The grand majority of investors dramatically underperform the markets even with the “benefit” of their market forecasting “advisors”.
The need to see the future of the markets satisfies an emotional desire in many investors even while it’s often detrimental to them financially. The smarter way to invest is to accept what the markets provide and not worry at all about constantly chasing the elusive “best fund” or “hottest sector.”
Investment portfolios really only have one purpose and that is to pay for some specific future goal. The most reliable strategy is one that you can stick with. Start there. Ready for a real conversation?