Look out, the stock market is scaring people again! There is no doubt that falling stock markets are scary and unnerving to a lot of folks. It’s not much fun watching something go down when you have no control over it. Last week, the market caught the attention of some folks, but on Monday, February 5, 2018, everyone was paying attention.
In terms of points lost, it was the biggest loser in stock market history. But that’s not the whole story. In percentage terms it was a large loss but nothing close to some of the biggest drops in history. However, that bit of news may not be that comforting.
In light of that, I spent some time today preparing a 10-minute video presentation to help put current events into perspective. I hope it helps with the nerves and maybe it will lower your blood pressure a bit too. Please feel free to share this with anyone who you think it might help.
Stock Market Jitters… Stock Market Predictions 2016… What To Do?
The New Year has not been kind to financial markets. In the back of people’s minds I sense fear of another meltdown like 2007-2009. Unfortunately, no has that answer until after the fact. That is why it is so important to make sure your investments are aligned to your individual circumstances. Depending on someone to time the market or to pick individual securities only adds to the level of risk you face.
On the program this week, I cover the market downturn as well as the abysmal record of Wall Street and other financial professionals (United Kingdom and Australia) for predicting market returns.
Since it is the beginning of the year, I do provide you with a list of 10 forecasts that I feel very comfortable about. These forecasts provide you with some of the reasons why it is so hard for market prognosticators to provide any value.
Finally in the last segment, I remind people to focus on what they can control and not to worry or focus on what you cannot. In this segment, I give you a sneak peek at a project we have been working on for a while. We feel that Wall Street and its beat the market mantra has led so many people down the wrong path. Hopefully, soon, we can let you know about a completely different path that should provide investors a better chance at success.
Conventional wisdom says that Wall Street helped build America. But what if the role of Wall Street has changed in recent times. That is the argument that financial columnist Bob Veres makes in a recent article entitled, The Case Against Wall Street.
In this excellently written article, Bob takes on the role of a prosecutor trying to convince an imaginary jury that Wall Street has become a drag on the American economy and consumers. Bob argues that Wall Street has been artificially inter positioning itself between those who have capital and those who need it and charging ever increasing and unnecessary tolls along the way.
Bob provides a convincing argument that Wall Street has been able to maintain this “cartel” by unduly influencing regulators and lawmakers through its outsize political contributions and a relationship that has become too cozy with the regulators.
On the program this week, I start the program with a quick summary of 2015 and then move into a review and comments about Bob’s article.
Here is the show from this week. I hope you enjoy it.
Thank you to Justin Siddhu, my great producer for an awesome year. And of course, thank you to all of my listeners over the years who make it all worthwhile. I hope that all of you enjoy a healthy and prosperous 2016!
Often people will ask me, how did the market do this quarter? Keeping score is one of the more difficult things for people to do. When someone asks how did the market do, there is a simple answer but it only scratches the surface of the right answer in my opinion. It is not as simple as looking up at the scoreboard and noticing the Patriots are beating the Seahawks.
Keeping proper financial score requires forethought about what is important to you. Ultimately, all that should matter to you is how are you doing towards achieving your financial goals. But the world is still fascinated by the concept of beating the market. My opinion on that is who cares! More bad financial decisions have been made by people trying to beat the market.
Of course, the market is still a yardstick, but it should not be the holy grail of profit only if you beat it. Another major problem for people is comparing their results to their friends, family and business associates. That is a very dangerous pastime as well. Just worry about how your doing and you will better off for it.
However, I do understand the fascination about keeping up with how financial markets have done. It is the heart and sole of benchmarking the investments you have. You do need to look at the indices in order to determine how your investments have done compared to the market and its peers.
I have linked a quarterly report for the fourth quarter of 2014 to give you an example of one. It contains some slides reviewing financial markets as well as a voiceover explaining in simple terms what happened. Let me know if this is something worthwhile to share with you on a regular basis.