You bet it is. What does that really mean? It means the stock market, whichever index you use, is going up and down like a yo-yo. So far this year the general trend is up. When will the trend change? That is the question of the day, or year rather. The easy answer is when stock sellers outnumber buyers. No one knows when that will be, or even what the catalyst will be. We have seen these volatile stock markets before and so far the volatility has always ended, and the stock market starts to rise again. Of course, the past isn’t reliable as a prediction of the future.
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”
- Paul Samuelson
There are plenty of doomsayers, as there always are. These prognosticators are full of doom and gloom. One such seer has been calling for this washout of the market for the last five years. Well now, he may be right, finally. And where would your stock portfolio have been if you had gotten out of the market five years ago? The market as measured by the S&P 500 was at 2,141on October 16, 2016. The S&P closed at 4,340 on October 12, 2021. I’ll let you do the math.
Over time the markets rise. Many have tried to guess the best times to be in or out. I have been an investment advisor for over 25 years and I have never seen an investor, advisor, or prognosticator do this successfully.
Even if you are correct on when to get out, when do you get back in? Aye, there’s the rub! So if it’s impossible to know when to be in or out of the stock market, what are your options?
First, you should only be in the “market” with long-term money—money you will not need for the next three years. There is no guarantee, but the stock market has historically risen over three years. The Law of Averages should be on your side.
Second, have a plan. Thrive Wealth Advisors believes in financial planning and practices asset allocation and rebalancing to smooth out the market’s ups and downs. This methodology doesn’t prevent losses but it helps mitigate the volatility, and hopefully, provide positive returns over time. Having a plan gives you an anchor and realistic expectations.
“The four most dangerous words in investing are:
‘This time it’s different’.”
- Sir John Templeton
Step back from your portfolio and BREATHE! Don’t let the cacophony obfuscate your long-term financial plan and goad you into doing something you may regret.
In the meantime, here is a song from the Beatles. It is apropos for our market watching and hopefully for the country as a whole. The sun always rises.
https://www.youtube.com/watch?v=xUNqsfFUwhY
If you are feeling volatile give me a call.
Adron Krekeler
703-740-4671