Watching the news, scrolling social media, talking to your adviser, hearing about hot stocks at dinner parties, not to mention the complexity of all the available investment products leaves even the most experienced economist and fund manager at a loss of what to do now. If we are lucky most financial professionals are right half the time they make a prediction. So at best it’s a coin toss. The only tried and true investment strategy is buy and hold….for a longer time than you can stand right now. By the time you are able to enjoy its benefit your life will have changed so significantly that your original desire or intention will not be relevant, but you’ll have a nice chunk of money to enjoy it. The late John Bogle who founded the Vanguard Funds pioneered this strategy and everyone would do well to heed his advice.
Today the stock market is hovering at its highest level ever, and has been climbing steadily since the disaster of 2008. If your account balance had lost a third of its value then, it regained its loss, then doubled. Assuming you did nothing.
Why the pros and the amateurs have such a hard time predicting the future despite all the information available is because human emotions are what drive the economy. When people feel like the future is bright we spend, and when we expect doom we stay in. That can change for any individual as well as for larger and larger groups of people at any given moment. Our brain is a prediction machine and an unwieldy one at that.
The success of investment relies heavily on human behavior. History shows us that we are a very progressive species and we can rely on that for our investments over time. But right now we in a time of particular uncertainty. The politics of the world are unstable, the values of companies are very high, there is a lot of personal, corporate, and country debt that needs to be serviced.
What we have the most information about at any given time and which is especially important in uncertain times like now is our own behavior. As an investor or a want-to-be investor, use that to your advantage.
Write down a list (or update your list) of all your financials. Your pay, expected pay, debt(and it’s Annual percentage rate), investments, what you own and most importantly your goals near term and down the road. If you need some of the money that is invested now in the next five or ten years, it may be worthwhile starting to move it somewhere safer than stocks. If you have cash ready to invest, make sure there still is some left if the markets crash….that’s the best time to buy not sell. Don’t worry you’ll know when that kind of crash happens….it’ll be clear and present on the news and in conversation. It doesn’t happen often. Once a decade give or take.
Check your debt levels, and most importantly your spending to saving ratio. Besides working and having cash available for buying opportunities, adding to your savings regularly is one of the best ways to increase your wealth.
Focus on your own tendencies, and desires rather then trying to predict those of others. Invest in the long process of progress. Know your goals but dedicate your attention to today’s work.