What's The Weather Forecast??
This past weekend the forecast called for 90s and humid. Then Friday night it changed to rain early and continuing to rain throughout the day. Very disappointing for someone who was looking forward to floating on a pontoon boat Saturday afternoon.
As the day progressed the clouds gave way to sun. Before noon it was a beautiful day. I guess this time my grandpa was right when he said ‘rain before seven, sunshine by 11’. Thanks grandpa!! Will I rely on grandpa’s saying in the future? He has been right in the past however there have been times when he was wrong. So, the short answer is no.
By the way we had a great time on the boat, swimming and just hanging out with great friends.
Given the past performance of weather forecasters why does everyone, myself included, continue to watch the forecasts? It seems to me the weather forecasters are wrong more than they are right. Yet every day we watch for that days’ weather forecast.
WHY?? Because we want to plan our day. What we don’t know is that there are thousands of variables that must align for the forecast to become reality.
The same holds true for those that forecast future stock market moves. There are thousands of variables that must perfectly align to repeat past stock market moves.
Yet, investors continue to search for the ‘guru’ who will tell them what to do with their investment dollars. These investors are all caught up in short term volatility. If it’s raining right now we must assume it will continue to rain. And if the sun is shining we must assume it will continue to shine.
If the equity markets only went up there would be no or less reward.
I just read a forecast, ‘Fed may cause a full blown correction’. The key words are ‘may cause’. Many investors see this and react by selling their stocks. These investors are looking for a reason to sell and the big brokerage firms give them the reason.
Don’t forget these huge brokerage firms make money on every trade, whether you make money or not.
Investors would be better served by working with an investor coach/fiduciary adviser. Your coach will help you build a prudent, globally diversified portfolio. Your portfolio will be at the right level of risk for you and your goals.
Any adviser that cannot tell you in numerical terms your expected return and your expected volatility is speculating with your money.
This is followed by periodically rebalancing back to the original allocation.
Most importantly your coach will help you remain disciplined.
Your coach may even show you that downturns are a GOOD thing. If there were no downturns there would be little or no reward.
Patience is rewarded over the long term.