Back Over the Top


On August 12, 2020 the S&P 500 briefly touched above the all-time high it abandoned back in February. It currently stands as the fastest recovery in US market history, with the S&P 500 rising over 50% in just about five months. Who could have predicted such a stunning turnaround?

Nobody. And that’s just the thing. Nobody predicted we’d be contending with a global pandemic either. It’s said that life is stranger than fiction. Likewise, the future can be wilder than the most outlandish predictions. 

It bears repeating that predication is largely a fool’s errand. But it sure is tempting! Imagine if there were a way to consistently know what was going to happen next in markets. If the tea leaves could just give us that glimpse, we could nimbly dart in and out of markets at precisely the right time to maximize our returns and minimize our risk. If only.

As painful as it is to write, 2020 is a long way from over. Who knows what surprises or calamities lay in store? Nobody! But that won’t stop people from crowing about what’s about to happen next. They’ll tell you who is going to win the election and how it’s going to affect the economy. They’ll tell you what’s going to happen to the stock market when the Federal stimulus starts to wind down. They’ll tell you about the economic impact from a COVID-19 vaccine and when to expect it.

My best advice: ignore it. Maybe they’re right. But they’re probably wrong. Either way, who cares? Investing is and always will be a LONG-TERM commitment. What happens next week, month or year is inconsequential to the goal and objective of an investment portfolio.  Anyone who thinks otherwise has no business being in markets. It takes time to combat the effect of short-term volatility.

And it also takes diversification. Nobody that’s retired or close to it should have all their money in stocks. Cash, bonds, annuities and the like can all work to provide much-needed stability when market volatility strikes. Be sure you have an adequate balance and stick to your plan. Your long-term success requires it.

Stay the course,

Mike

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