“The
stock market doesn’t make sense,” is what I often hear from clients and
friends. In the short run I can understand why people feel that way. In fact, I
have heard people say the same thing each year for decades. The market moves in
sometimes unpredictable directions in the short run, but over the long run, it
almost always goes higher as all the profits generated by global companies
almost every year have to eventually appear as positive returns for a
diversified stock portfolio. There are no guarantees of course but long-term
wealth generally comes from staying invested through good and bad times since
people can’t predict when the big moves up in the market will occur. Markets
often go up at the most unlikely of times because many investors look beyond
the current mess towards what the economy will be in the future and they buy
now so they don’t miss it. And those that time the market often get out to
avoid risk but then never get back in and then watch the market provide profits
to everyone else but not to themselves. So stop trying the understand the
market in the short term. It may never make sense to you. But look at how
markets have done over any 10 or 15 year period and you’ll understand why
staying invested and ignoring the short-term will help you get the high returns
you deserve. (Past
performance may not be an indicator of what to expect in the future and your
individual circumstances should be considered in any investment choice.
Investments in stocks can rise or fall in value, especially in the short run,
and should be the part of your portfolio intended for your long-term needs and
not for money you may need in the short term.)
Larry
Pike, CFA
Client
Priority Financial Advisors LLC
www.clientpriority.com
