{3:00 minutes to read} Everyday, the stock market has an expected rate of return. This means that on the day that you invest, you have the potential to earn an expected rate of return.
If you wait for that “perfect” time and hold off, you miss capitalizing on the market’s rates of returns.
When it comes to investing, you’re either in or you’re out.
Today is the Day to Invest
Right now, many people are asking: Why invest when the market’s at an all-time high?
While it’s true that the Dow Jones Industrial is at an all-time high, the following markets are not:
- Emerging Markets
- Real Estate
- International Stocks
By focusing only on the well known Dow Jones Industrials, we exclude opportunities in the global markets which are necessary for a diversified portfolio. Why invest in a single stocks that have similar expected rates of return (with extra risk) as a basket of globally diversified securities (using factor investing)?
Dollar Cost-averaging is also a great option for investors. This technique stems from the same theory: When you have money, invest it. Global securities have a positive expected rate of return at all times. So why wait?
Hindsight Bias
It is impossible to predict volatility or price fluctuations. Given that truism, hindsight bias (“I should have bought yesterday” or “Why didn’t I listen?”) is not a useful practice—it just leads to emotional angst.
It is important to separate your personal emotions from investing; the market doesn’t know you personally or care about your choices. The only reason anyone buys a stock is because they think it will have an expected rate of return and make money.
Each transaction has two sides: a buyer and a seller. The buyer always believes that he’s going to get a return or he wouldn’t buy. The seller believes that their capital can be deployed better elsewhere (both think they are right). It’s an incredibly competitive market. That’s a critical point.
In the real world, today is the day to invest. Emotion and concern about market fluctuations can lead to paralysis. In addition, be wary of financial planners who use scare tactics. Every day you wait is expected returns forever lost.
Successful investing is about long-term discipline, not about short-term predictions.
The biggest enemy to an investor is him/herself.
Whatever your investments consist of (i.e., portfolio consists of stocks, bonds, and money market funds), it is best to be in. Our firm utilizes scientifically-proven, Nobel Prize research to inform our practice and work with clients to help them amass more wealth.
We’re in it with you! Contact us to invest today.
Jeff Holland
info@viaiv.com