Being Smart with $$ -- People Say the Stock Market Makes No Sense

 

“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