Our August PastCast
What’s going on in the market?
August has been full of mostly positive economic news for the US, but the noise is starting to build in the headlines. As mid-term elections approach, political contests around the country are heating up, and as expected, markets are unsure of what to make of the potential outcomes and ramifications this November. That said, stocks keep rolling. While we are nowhere near the returns investors experienced broadly in 2017, the market has now entered the longest bull market in history. Milestones like this tend to lead to a heyday for market “experts” and tv pundits beginning to predict the next huge crash, which quite honestly has been going on since this recovery began in 2009. Our view hasn’t changed: none of this matters for those investing for a long-term goal like retirement. All-time highs are a great thing, but our focus is on the long-term and the potential for a correction is always on the table. It is no reason to change your strategy.
Here’s the lowdown on all-time highs.
For some context, it’s important to remember just how easy it is to reach a new all-time high so we don’t get too carried away with return expectations. Over just the last five years alone, here are the number of times the Dow has hit record highs (source: the balance)
- YTD 2018: 11 times
- 2017: 70 times
- 2016: 26 times
- 2015: 6 times
- 2014: 39 times
- 2013: 52 times
Think about it for a second…it really only takes an increase of any amount, even 0.00000000000001% to reach a new all-time high, once you’re already sitting at an all-time high. Over the many years, if not decades most blooom clients have until they retire, they are likely to experience hundreds, if not thousands more record highs, so why worry about the potential for a crash? Why not instead keep your eyes on the prize? Stay focused on the end goal and remind yourself that along with the many new all-time highs you’re likely in for over the years ahead, your investments will also experience many many market dips. Historically, it has always benefited those with a disciplined approach, to view those pullbacks as opportunities and a market “on sale”, rather than a reason to run for the hills.
Enjoy the summer heat while it lasts, folks.
As we enter this last month of summer, remember that things could very well cool down soon in the market, BUT they could also very well continue to stay hot. And that’s the kind of forecast the most successful investors will pay attention to, because the only short-term prediction that can be made about the stock market with 100% certainty is this: nobody has a clue. But for those focused on the long-term forecast, we see no reason to believe that it won’t remain sunny for those that are patient, just as it historically always has.
To be clear, we are not recommending or even hinting that investors should attempt to sell high or time the market. Sure, It would be great to sell at the all time high and time it perfectly so that you don’t miss any potential gains, and then buy back in at the lowest point…but there are some hurdles to this: 1) you could be, but we doubt that you’re watching the market 24/7, 2) no one knows when the trends truly start to turn, 3) you have to be right twice for that to happen, 4) most 401k accounts have restrictions on trading within it like a brokerage account, and 5) you’re restricted to the funds that are available through your plan.
Consider this: you hear horror stories of the crash in late ’07 through ’08 – people losing everything, retirement’s being ruined…. those do happen, unfortunately. HOWEVER, short of positions going to $0, had those investors not sold, they would be considerably better off today than they were pre-recession.
Stay focused and please reach out if you’d like to discuss with our advisors.
This information is provided for discussion purposes only and should not be considered as advice for your investments. Investing involves risk. Your investments are subject to loss of principal and are not guaranteed.