As if the headlines weren’t already bad enough, two huge hurricanes blew through our nation wreaking havoc and devastation at an ungodly cost. Some estimate that it could cause 1 full percentage point of GDP. That’s quite a hit considering we have had a tough time achieving a steady 2% growth in GDP!
As is always the case, if you just focus on the nightly news you would never invest. Look at what this year’s headlines have brought: Brexit, the Trump election, Trumps failure (so far) to get his basic agenda passed, a new European debt crisis, North Korea…etc.
The bottom line is that what the media says is vital, is only vital to them. What is truly important to the market is corporate earnings and the direction of the economy. Unless there is a clear and present danger of a recession in sight, the market will continue to climb this wall of worry.
In fact, I love it when people are scared that the market is about to fall because that tells me that it will not. Stocks rarely go in the direction that the majority thinks it will and it never crashes when everyone expects it to. Here is where I get to say one of my favorite stock market idioms: “If it’s obvious, it’s obviously wrong!”
I know you’re reading this, thinking to yourself that something just doesn’t seem right out there. It’s hard to fight, but look at the reality. Credit is still flowing freely, the yield curve is still positive, the economy is strong and getting stronger and most importantly earnings have been great and trending higher.
So, when you start to feel good…that’s when you should worry!
Of course, it’s not going to be a straight shot higher. There will be a lot of pot holes along the way. If you are in your 20’s and 30’s, you can buy it and forget it.
If you are retired or in that retirement red-zone, a much more comprehensive retirement master plan is needed and it is time to graduate to a retirement advisor. They “should” understand how to prepare you for the different phases of life as you move from an accumulation investor to the preservation and distribution phase, and how to invest your hard-earned money to get the best returns with the least risk possible.
Feel free to contact me with any comments or questions.