Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
That was my point. Buying and selling on the emotions of election results can be a roadblock to big gains.
Or can be seen as someone who had cash to initiate a new position with new cost basis (hopefully was not gained from a loss) and who has enjoyed a great run up with that new position.
When unsure of market direction and opportunities, going to cash is not always a bad decision. STAYING in cash when you've been able to determine market direction and opportunities IS a bad decision.
Political exigencies may trigger large short-term gyrations, but when averaged over say a year or longer, it’s corporate earnings that drive the stock market, and not the mannerisms or even the policies of whoever occupies the Oval Office. I fully appreciate the feeling of dread and revulsion at the events of one election (or another), but in November 2016 I relied on my usual passivity and indecisiveness to take no action – and thus, to avoid actions inimical to portfolio growth.
Besides the various trends in market-behavior, we also must contend with personal psychology, known colloquially as one’s “pucker factor”. If volatility or a protracted decline so assail one’s composure, that one is liable to sell in untimely circumstances, then one should limit one’s equity-stake in good times or bad. The is the conventional advice – and it’s good advice. But a person who is both reasonable, having had some experience with investing, and also timid, taking each new crash as a tragedy and not some temporary bump, has a double burden: reason enjoins us to stay the course, emotion gnaws at us to do something drastic. The upshot might be good long-term financial success, at the price of stress and self-loathing in every episode of decline. Our money does well for us, but we do poorly for ourselves. This is especially so, if we’ve saved more than our peers, wherein said peers envy us for the savings, jeer at us for what’s in their terminology an insidious greed on our part, and then gloat whenever the market falls, saying that we should have spent the money on a better life, or maybe humbly settled for a bank-CD.
Since a financial advisor is foremost a psychologist, my impression is that what we (the collective “we”) ought to do, is to cultivate friendships with like-minded locals, who can commiserate and buttress each other, for free. The social-aspect of investment, is at least as important as the factual aspect. When properly girded by support for persons in positions similar to our own, we won’t desperately scurry for cover, when the next inevitable crisis comes. But if alone, we’ll second-guess ourselves, and do stupid things.
Quote:
Originally Posted by txgolfer130
When unsure of market direction and opportunities, going to cash is not always a bad decision. STAYING in cash when you've been able to determine market direction and opportunities IS a bad decision.
Fair enough, but if as a matter of practice, what if we're ALWAYS unsure? Ought we then to remain mired in cash? I mean, if we honestly have no inking regarding future trends, should we be mired in trepidation, or just leave the house without donning a hard-hat, in hope that we won't be whacked by a flying brick?
Fair enough, but if as a matter of practice, what if we're ALWAYS unsure? Ought we then to remain mired in cash? I mean, if we honestly have no inking regarding future trends, should we be mired in trepidation, or just leave the house without donning a hard-hat, in hope that we won't be whacked by a flying brick?
If after a period of time that has passed the trigger event (election/inauguration/taking office for ex.) and you're still unsure, then at that point (which is less than 6 months) you should seek professional advice of a CFP or financial advisor which is readily available for both fee's and without fee's re: future trends, market conditions and retirement plans and how they can work going forward.
Deciding to go to cash means you have to be right on the timing when going out and then have the courage to get back in and also time that correctly. Most people simply don't have that in them
Deciding to go to cash means you have to be right on the timing when going out and then have the courage to get back in and also time that correctly. Most people simply don't have that in them
Anytime you are using "timing" in any part of a financial equation, should be the clue to step back and seek professional advice for any investor. Only in options should that come up, and even then only in regards to expiration. Deciding to "time" the market is the main driver to losing more than anything. If a client is that hesitant, or gun shy, I would suggest a managed account.
If after a period of time that has passed the trigger event (election/inauguration/taking office for ex.) and you're still unsure, then at that point (which is less than 6 months) you should seek professional advice of a CFP or financial advisor which is readily available for both fee's and without fee's re: future trends, market conditions and retirement plans and how they can work going forward.
We have had a financial advisor (same one) for 10 yrs--
Used different guy/different firm/different approach for couple of years before that.
Our financial advisor believes in the market--that if it goes down it will come back up --at some point
likely thinks we are unduly conservative--
But he is also a partner in a very successful CPA firm--has another 15-20 yrs to work before he retires-
and is much more comfortable in how he understands/interprets investing principles and market information.
But that doesn't mean that his choices for our investments are always successful in that they meet/exceed the benchmark return...
he loves DFA funds but not all DFA funds are leaders in their sectors--even if they have low fees...
some funds with low fees are more successful...
Any advisor you go to is going to have a point of view--
Just talked to friend of mine in Spokane--she and her husband have different risk levels--
Her husband has moved to bonds---and bought gold and silver coins and bullion--he really thinks the tax plan with the added debt levels will cripple the US and make the $ worthless...
Their advisor said there is room for measure of that (gold/silver) as an investment strategy, as buffer
Our guy would never agree that physical gold or silver is a real asset...
We have had a financial advisor (same one) for 10 yrs--
Used different guy/different firm/different approach for couple of years before that.
Our financial advisor believes in the market--that if it goes down it will come back up --at some point
likely thinks we are unduly conservative--
But he is also a partner in a very successful CPA firm--has another 15-20 yrs to work before he retires-
and is much more comfortable in how he understands/interprets investing principles and market information.
But that doesn't mean that his choices for our investments are always successful in that they meet/exceed the benchmark return...
he loves DFA funds but not all DFA funds are leaders in their sectors--even if they have low fees...
some funds with low fees are more successful...
Any advisor you go to is going to have a point of view--
Just talked to friend of mine in Spokane--she and her husband have different risk levels--
Her husband has moved to bonds---and bought gold and silver coins and bullion--he really thinks the tax plan with the added debt levels will cripple the US and make the $ worthless...
Their advisor said there is room for measure of that (gold/silver) as an investment strategy, as buffer
Our guy would never agree that physical gold or silver is a real asset...
I think it's great you have an advisor first and foremost. Kudos to you and your husband, that is the biggest hurdle.
I do worry though that you (and you seem to have already fleshed this out) and he might not be the best fit, and maybe not even on the same page of the book. I also love DFA funds, however, they are a very stay the course type of fund company. Advisors work hard to be accepted to them, and they can be dropped easily by DFA if they move the portfolio around too much.
I 100% agree that every advisor is going to have a point of view, you should find one that understands what you want to do and is ok managing that risk for you.
Any plan you choose should be in the mind of the advisor, prudent, meeting your overall goals and objectives and make sense for your retirement roadmap. When you start deviating from that roadmap or (to use a road trip analogy) stop listening to the GPS is when issues can creep in and doubt start to make you feel uneasy. With the fee's or commissions you're paying you should NEVER feel either one.
There can always be a deviation from the benchmark, and that's ok. As long as you understand WHY there was deviation. Was it due to the risk level for you? Was it because something changed in the timeline for the retirement plan? Was it an unforeseen withdrawal or re-allocation b/c of some new found wealth that threw the mix off? There should always be a reason why, not just well...it happens.
But again, kudos for taking the hardest step and many good wishes for you!
Don't read pundits. Those that are bullish are usually bullish during bear markets also. Those that are bearish are usually bearish during bull markets. Those investment forecast records that look great now will look like crap during the bear market. Those that look great during the bear market will look like crap during the next bull market.
Market forecasts aren't cast in stone. Market conditions and policies are subject to change, and they're often intertwined so as to influence changes in the other. If you read pundits or forecasts, find one that updates his views regularly so that you can track the changes.
There are factual errors in the original post. Spend less time reading pundits and more time reading news that's relevant to form your own factbase and opinions. It is the same as reading market forecasts. You will have to follow up on a subject or topic regularly to understand changes in policy and market conditions.
Please dont turn this into a political thread
I used a personal decision to illustrate how emotions can influence investment choices
I don't think he was being political. Just trying to say it's a bad idea to invest based on politics, more generally.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
