By Financial Advisor Hans Smith
Financial markets can be a cruel and unforgiving place, and almost never seem to do what the majority of investors believe they will do. Instead, markets tend to humiliate those that think they can predict the future or how markets will ultimately react to current and/or future news.
As an investor you need to let go of the illusion that the stock market direction is something you can predict with consistent accuracy. This concept is contrary to what many in the financial media make investors believe. Instead, it's important to focus on the items that ultimately generate investment returns over time: Seven Items that Generate Investment Returns
Staying the course means going against your emotions on occasion, and often doing nothing when everyone else seems to be doing something. It's not easy to think and act for the long term when it doesn’t feel right in the short term. A well laid out investment strategy incorporates diversification and consistently buying into asset classes that are out of favor with the herd.
Many investors thought the time for action was on October 13, 2022. Investors generally sold stocks in droves that morning as the inflation report came in far worse than expected. The consensus narrative surrounding financial markets was that things were about to get far worse before they got better. A funny thing happened later that same day, however; in the midst of all the bad news, stock market sellers subsided, equity markets reversed course and closed higher, and equity markets really haven’t looked back since.
Year after year, financial pundits continue to make wildly inaccurate predictions and yet are rarely held accountable for their words. Wall Street strategists tend to get pessimistic when they should be optimistic, and optimistic when they should be pessimistic about forward-looking investment returns. Afterwards, they tactfully sweep inaccurate predictions under the rug by doing things like “upgrading” and “downgrading” their “price targets” throughout the year. Wall Street is often reactive rather than proactive, and are every bit as fallible as everyday investors.
The investment advisory industry has a long and storied history of intentionally obscuring their fees. This is not in any way accidental, and in my opinion the industry has firmly resisted a true “fiduciary standard” for years. Here are a few articles that can help you get started with understanding investment fees:
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Hans Smith
P: (802) 829-6899
E: hans@onedayinjuly.com
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