Are You Ignoring the 24/7 News Cycle and Focusing on Your Financial Plan?
No one can guarantee when the markets will go up or down. Lots of talking heads and so-called “experts” like to claim they know when factors like news items or current events will impact how the stock market behaves, but it’s all guesswork.
It’s extremely easy to get caught up in a 24/7 news cycle that produces headlines and predictions meant to invoke emotional reactions in viewers. But the key to long-term financial success is tuning out the noise and understanding that ups and downs happen.
We know markets can be volatile. That’s part of the price paid to invest and earn more money than you could almost anywhere else — and it’s also something to account for in a comprehensive financial plan.
The only certain thing is that the market will rise and fall. We don’t know exactly when. All the noise from reporters, TV hosts, or others speculating about what the market will do next because of elections, the Fed, or whatever else they point to as the why behind their guesswork only serves as a negative distraction.
Instead of panicking and reacting based on what you hear on the news or from folks at work, you can create and set a financial plan, tailored specifically to you, based on reasonable, objective decision making (instead of emotional and irrational). A great financial plan accounts for your goals, your risk tolerance, and your concerns — and it means you already know what to do when others threaten that the market may take a turn due to whatever people happen to be worked up over today.
WHAT DOES IT MEAN TO HAVE A COMPREHENSIVE FINANCIAL PLAN?
A comprehensive financial plan is specific to you. It includes factors like:
- Your goals (saving for a house or a child’s college education, retiring early, starting a business, and so on)
- Your income
- Your cash flow
- Your tax situation
- Your target retirement date
- Your future earnings and income
- Your risk tolerance
- Your time horizon
Note that each of these components of a financial plan starts with “your.” That’s because a comprehensive financial plans starts with you — not the news, or the global markets, or future predictions.
And of course, a financial plan can include more than just what’s listed here. Again, the theme is you. What’s important to you? That has to be factored in.
While investing is an important part of achieving your long-term goals, focusing solely on investments alone is similar to running around a hamster wheel. There will be highs and lows, but if you aren’t working toward something, you’re just running in circles.
Investing coupled with a comprehensive plan that looks at the big picture ensures you are investing appropriately for your situation and making progress toward your goals.
DON’T PANIC AND REACT WITH EMOTION
One of the most important benefits to having a financial advisor is that they can serve as a gatekeeper to keep you from reacting emotionally and totally derailing your financial plan. When markets tank (like they did in 2008 and 2009), people start to panic.
As they watch the markets fall, they react emotionally. They can’t stomach losing so much money. They freak out! And then they sell at the absolute worst time: when markets are already down!
Keep in mind that after you sell at the bottom, you won’t know when to buy back in — and that often leaves people buying at the top of the market. Selling low and buying high is the opposite of prudent investment advice. Meet the “behavior gap”.
Think of it this way: you wouldn’t go to a store and specifically not buy something because it was on sale. It’s the same way with stocks. When they’re down, they are “on sale.” This is the rational, objective way to look at the market.
But when it’s your money and your net worth you see taking a hit because the market dropped, it’s extremely difficult to maintain that mindset and act rationally. Again, most people panic and never dream of buying because it really hurts to see those red down arrows next to your investment balances.
An objective third party can help you prevent such a huge mistake. A financial planner willing to act as your fiduciary will remind you of your comprehensive financial plan that was already built assuming there would be market volatility.
In short, that means your planner can give you some of the most valuable advice you can ever receive when everyone else is panicking: don’t deviate from your plan! That may mean staying the course and taking advantage of this latest ‘sale’.
THE RIGHT PLAN WILL HOLD STEADY THROUGH CURRENT EVENTS
Ultimately, a comprehensive plan stands the test of time. Because market fluctuations are expected (remember, it’s the timing that’s unexpected), your plan already accounts for them.
Your financial plan tells you what to do even in turbulent markets or troubled and uncertain times. It’s designed for the long-term. What feels like a big, massive upheaval today will likely be a blip on the radar when you look back in 30 years.
The best way to safeguard against panic and emotional reactions is to have a financial plan — and then stick to it.
China's Push Toward Excellence Delivers a Global Robotics Investment Opportunity
Written by: Jeremie Capron
China is on a mission to change its reputation from a manufacturer of cheap, mass-produced goods to a world leader in high quality manufacturing. If that surprises you, you’re not the only one.
For decades, China has been synonymous with the word cheap. But times are changing, and much of that change is reliant on the adoption of robotics, automation, and artificial intelligence, or RAAI (pronounced “ray”). For investors, this shift is driving a major opportunity to capture growth and returns rooted in China’s rapidly increasing demand for RAAI technologies.
You may have heard of ‘Made in China 2025,’ the strategy announced in 2015 by the central government aimed at remaking its industrial sector into a global leader in high-technology products and advanced manufacturing techniques. Unlike some public relations announcements, this one is much more than just a marketing tagline. Heavily subsidized by the Chinese government, the program is focused on generating major investments in automated manufacturing processes, also referred to as Industry 4.0 technologies, in an effort to drive a massive transformation across every sector of manufacturing. The program aims to overhaul the infrastructure of China’s manufacturing industry by not only driving down costs, but also—and perhaps most importantly—by improving the quality of everything it manufactures, from textiles to automobiles to electronic components.
Already, China has become what is arguably the most exciting robotics market in the world. The numbers speak for themselves. In 2016 alone, more than 87,000 robots were sold in the country, representing a year-over-year increase of 27%, according to the International Federation of Robotics. Last month’s World Robot Conference 2017 in Beijing brought together nearly 300 artificial intelligence (AI) specialists and representatives of over 150 robotics enterprises, making it one of the world’s largest robotics-focused conference in the world to date. That’s quite a transition for a country that wasn’t even on the map in the area of robotics only a decade ago.
As impressive as that may be, what’s even more exciting for anyone with an eye on the robotics industry is the fact that this growth represents only a tiny fraction of the potential for robotics penetration across China’s manufacturing facilities—and for investors in the companies that are delivering or are poised to deliver on the promise of RAAI-driven manufacturing advancements.
Despite its commitment to leverage the power of robotics, automation and AI to meet its aggressive ‘Made in China 2025’ goals, at the moment China has only 1 robot in place for every 250 manufacturing workers. Compare that to countries like Germany and Japan, where manufacturers utilize an average of one robot for every 30 human workers. Even if China were simply trying to catch up to other countries’ use of robotics, those numbers would signal immense near-term growth. But China is on a mission to do much more than achieve the status quo. The result? According to a recent report by the International Federation of Robotics (IFR), in 2019 as much as 40% of the worldwide market volume of industrial robots could be sold in China alone.
To understand how the country can support such grand growth, just take a look at where and why robotics is being applied today. While the automotive sector has historically been the largest buyer of robots, China’s strategy reaches far and wide to include a wide variety of future-oriented manufacturing processes and industries.
Electronics is a key example. In fact, the electrical and electronics industry surpassed the automotive industry as the top buyer of robotics in 2016, with sales up 75% to almost 30,000 units. Assemblers such as Foxconn rely on thousands of workers to assemble today’s new iPhones. Until recently, the assembly of these highly delicate components required a level of human dexterity that robots simply could not match, as well as human vision to help ensure accuracy and quality. But recent advancements in robotics are changing all that. Industrial robots already have the ability to handle many of the miniature components in today’s smart phones. Very soon, these robots are expected to have the skills to bolster the human workforce, significantly increasing manufacturing capacity. Newer, more dexterous industrial robots are expected to significantly reduce human error during the assembly process of even the most fragile components, including the recently announced OLED (organic light-emitting diode) screens that Samsung and Apple introduced on their latest mobile devices including the iPhone X. Advancements in computer vision are transforming how critical quality checks are performed on these and many other electronic devices. All of these innovations are coming together at just the right time for a country that is striving to create the world’s most advanced manufacturing climate.
Clearly, China’s trajectory in the area of RAAI is in hyper drive. For investors who are seeking a tool to leverage this opportunity in an intelligent and perhaps unexpected way, the ROBO Global Robotics & Automation Index may help. The ROBO Index already offers a vast exposure to China’s potential growth due to the depth and breadth of the robotics and automation supply chain. As China continues to improve its manufacturing processes to meet its 2025 initiative, every supplier across China’s far-reaching supply chains will benefit. Wherever they are located, suppliers of RAAI-related components—reduction gears, sensors, linear motion systems, controllers, and so much more—are bracing for spikes in demand as China pushes to turn its dream into a reality.
Today, around 13% of the revenues generated by the ROBO Global Index members are driven by China’s investments in robotics and automation. Tomorrow? It’s hard to say. But one thing is for certain: China’s commitment to improving the quality and cost-efficiency of its manufacturing facilities is showing no signs of slowing down—and its reliance on robotics, automation, and artificial intelligence is vital to its success.
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