We have crossed off another month this year and the various indexes and averages are holding close to record highs.
Gains are not limited to the stock market as crypto and precious metals have also gained in value.
Your house gained in value.
These are some of the reasons that the positive mood continues to dominate the trading market.
There is some thought that the fall will usher in a pullback, but I felt that the elections in November may distract some of the attention.
I lived through the ’87 market crash and to say it was no fun is the ultimate understatement.
Many sold out and it was literally jumping out at the worst time.
Within months most, if not all of the loss, had been recovered.
On the other hand, the tech crash at the end of 2000 took a decade to return to where it had been.
I am pointing out that relying on history as a predictor is dicey at best. We do have to study history so as not to repeat mistakes, but it isn’t a precise predictor.
I have been thinking that maybe we have far too much information at our fingertips.
I sometimes wonder about the content we absorb.
It is almost like the news has to be big and controversial for our short attention span. If there is not hyperbole, then there is no traction. Boring doesn’t do much for us these days.
I listen to talk radio as I am traveling and can only imagine to the
angst of staring at the clock and knowing that something has to fill up each and every second.
I also notice that it seems that commentators are pressing the extreme to get a reaction out of listeners. This is what bothers me about finding something that I can feel is actually going to provide me some information.
The bias on reporting for both the right and left leave me constantly looking somewhere else.
I find that same situation in financial news.
There is this constant onslaught of the next great prediction that will make your dreams come true and wealthy beyond your dreams.
The fact that someone would share that secret with you should send up a serous warning of red flashing lights.
On the other hand, boring investing does take far longer to actually produce significant gains.
Leverage is actually a great tool if not abused and your timing is good.
Good luck with that.
What I do know is the law of 72 which says that should the return you receive be 10%, you will double your money in just over 7 years. Now that is a great theory but real returns are closer to 5%.
This is why putting whatever you can and more into your retirement account is so important.
Keeping that investment singularly in an S&P 500 ETF such as the Vanguard VOO gives you a real opportunity to build something over time.
You take that with putting back cash ratably so as to have a cushion to fall back on in difficult times is the first task.
Essentially self-insuring yourself.
None of this is exciting and won’t be buying you a Rolex or Porsche.
It will however let you sleep at night.
Boring is not all that bad more times than not.
For most though, the market is the chance to make a really big hit.
It is almost a guarantee of failure as it is no plan at all and approximates gambling. You actually can double your money with one spin of the wheel.
If not the wheel then there is betting on sports, the lottery and prediction markets.
I have seen the ugly side of gambling collecting lost bets from my college friends. That taught me all I needed to know about gambling.
So here we sit with summer coming to an end and so much turmoil in the world. What I continue to see is companies reporting profits.
Sometimes it isn’t as good as projected but it is profits. The problem is we are at record highs.
Maybe the Fed will raise rates and it will allow us leave what savings we have, earning a return higher than the inflation rate.
Not a get rich quick but no worry of loss.
You have to realize it’s been decades since we have had that choice.
Not saying it is the answer, but swinging and missing can really put you in a bind you can hardly recover.
But that is the benefit of free enterprise, you can take the chance.