Now What After Dow Jones Industrial Average Hits 20,000?
The Dow Jones Industrial Average hit 20,000. The aftermath was a barrage of media stories—some encouraging, others less optimistic.
The positive stories prompted investors to buy more equities in expectation of more future gain; the cynics foretold the forthcoming correction with a warning: Get out of stocks. The one common theme all the articles share is that, yes, something is going to happen next. And this something will likely show gains and reverses, followed by more gains and more reverses.
The problem investors have to wrestle with is the “when”, the “how much” and the reasonable amount of risk they can handle based on their life’s circumstances, goals and values. Predicting the markets is a treacherous affair that may bring riches—but if history is any indication, it is more likely to leave your net worth plummeting.
But, we’re only human. We can smell a rally, a hot stock or a winning manager, right? It’s tough being a spectator, sitting on the sidelines while the whisper of riches is more of a shout.
We’re smart; we read the business journals, we watch cable news programs, we buy books and newsletters that may give us a competitive edge over those who miss out on the action. The noise swirling around the markets is like a cat smelling catnip—and rational thought becomes more than merely difficult.
When the urge hits and the image of a soaring market paints images of retirement in Bora Bora, stop and consider the following:
- For every share of stock you buy, someone has decided to sell it.
- Achieving your goals is less probable when your emotions are swayed to make decisions that can easily be regrettable.
- While you might believe you can stand risk; chances are, you may not be able to stand as much as you think.
- There’s more to living a fulfilling life than being plugged into the market from morning ‘til night.
- Any well conceived plan has an alternate “Plan B”. What’s yours?
Unbridled enthusiasm may be a warning sign of unrealistic expectations, risking the safety and security of your financial life. The markets’ history is full of rallies and corrections, new highs and dramatic pull-backs, constant movement and reactions to short-term speculation. There are winners and losers—and the contest is not played on a level field.
Given this information, protect your financial security by avoiding the noise and focusing on strategies that move you closer to your life’s highest values. Your financial security and life’s values are more important than the dream of the bit hit.
- Have a written financial plan that outlines your goals, both long-term and short-term.
- Work with a team of experts who offer guidance and advice. Make sure those experts have your best interest in mind with no conflicts of interest.
- Have adequate reserves allotted for unexpected events.
- Take risk management seriously. Understand where and how your financial security can suffer a significant loss. Think: Death, disability, legal liability, uninsured losses and the impact of sudden, swift and meaningful unforeseen occurrences.
- Monitor and update your plan when something changes that impacts your goals or circumstances.
Financial success doesn’t occur because the Dow hit 20,000 or any market indicator posts new highs. Financial success happens when you tune out the noise and follow your plan.
Most Read IRIS Articles of the Week (March 20 - 24)
Here’s a look at the Top 11 Most Viewed Articles of the Week on IRIS.xyz, March 20 - 24, 2017
Click the headline to read the full article. Enjoy!
In the world of ETFs, advisors face a similar challenge. Simply put, the menu of ETFs is massive. And while advisors used to debate only about the merits of active versus passive investing ... — Jillian DelSignore
Here are five reasons why we believe simply shifting your strategy, but not running from REITs, may provide desired yield—even in the face of yet another rate hike ... — Salvatore Bruno
There are different types of narcissists but handling them is always the same: be humble, don’t engage. — Tanya Beaudry
Use these simple tips to establish and grow valuable relationships with Centers of Influence to have them recommend you to their best clients. — Paul Kingsman
Are you getting enough qualified referrals from people within your network? Or are you relationship rich but referral poor? — James Pollard
ETFs offer attractive features—access to a broad range of asset classes, sectors and styles in a liquid, transparent and cost-effective vehicle. But before using that vehicle, it’s helpful to understand how it works ... — ProShares
While I personally won’t forsake my Starbucks ritual for McDonalds’ curbside delivery, I have to concede the prospect of having my breakfast provided to me as I pull up to a restaurant does sound appealing. — Joseph Michelli
So many leads, so little time. Your marketing strategy is generating so many qualified prospects and you can’t keep pace. It is an enviable position. — Elizabeth Harr
The stock market continues to soar. The natural question is: How long can this go on? — Mark Germain
New presidents typically arrive in office with an economic agenda. In the case of Trump, the nature of his proposals has invited comparison with a variety of changes made under the first term of President Ronald Reagan in the 1980s. — Matthew F. Beaudry
The hope for economic growth much beyond 2.0% looks to be deferred, as legislation appears to be bogging down and the Fed is reducing monetary support, clearly taking the path to interest rate normalization. — SNW Asset Management
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