With Thanksgiving right around the corner, here’s a cornucopia of investing items for you to chew on – in small portions:
– Earlier this year investors were, understandably, rattled. Some of our clients did call wanting to get out of their investments until “things looked better.” We reminded them the stock market is an anticipatory mechanism, anticipating economic activity six to nine months down the road. And the market will move prior to receiving confirmation that the economy is recovering.
Indeed, stocks moved during these dark days and have not looked back, rising more than 50% on all of the major averages.
– Fear is a greater motivator than greed. Hope and panic are not strategies that will prove successful over time. The move back up from this year’s Q1 COVID related drop has been in part a reactionary snapback rally from that panic. From here gains will have to be earned.
The easy money has been made. Stocks will respond to the outcome of the election, pharmacological advances in fighting the pandemic, the Fed and economic/corporate data.
– Investors should not go “all in” or “all out” unless their situation changes. Moderation is the play. If you’re bearish, scale back your allocation to the stock market. If you are bullish, increase that exposure.
However, make certain your asset allocation (your percentage allotment to stocks, bonds and cash) conforms to your long-term objectives. Generally speaking, the further out your objectives the higher percentage you should allocate to stocks.
– Don’t let your politics completely cloud your investment philosophy. We have hundreds of clients — some dislike President Trump passionately, some feel the same disdain over the potential for a Joe Biden presidency. Your political bent can cloud your belief in our economy, and therefore, the stock and bond markets.
You may not be very bullish on the stock market at this time. However, chances are you were not very bullish prior to the 2016 election — and the market is up 60% since that time. Invest according to your objectives, not your political views.
Politicians will come and go, but the spirit of America is lasting and the vibrancy of the economy is cyclical and this combination will outlast those on both sides of the political aisle who, while well-intended, are often misguided.
– Invest on a regular basis. Investors tend to avoid investing when a market cycle is near bottom, believing doing so is throwing good money after bad. We believe investing regularly, in good times and in bad –according to your objective, time horizon and tolerance to risk – is the best path in which to achieve wealth. No guarantee (of course), but history has proven that this is your best chance.
BOTTOM LINE: Think for yourself. Don’t be part of the herd. If history is any guide, it’s time IN the market and not timing OF the market that will ultimately pay off.
Please note that all data is for general information purposes only and not meant as specific recommendations. The opinions of the authors are not a recommendation to buy or sell the stock, bond market or any security contained therein. Securities contain risks and fluctuations in principal will occur. Please research any investment thoroughly prior to committing money or consult with your financial advisor. Please note that Fagan Associates, Inc. or related persons buy or sell for itself securities that it also recommends to clients. Consult with your financial advisor prior to making any changes to your portfolio. To contact Fagan Associates, Please call (518) 279-1044.
