Is Now the Right Time To Invest?

Yes—and so was yesterday, and the day before that, and the day before that, and so on—you get the idea.  If you have money you will not need over the next five years, you believe in capitalism and you are saving for your future, you should invest now.  And more importantly, you should have been investing all along the way.  Looking at the performance of the stock market over the past 5 years you immediately see what I am talking about.

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Using the S&P 500 to measure stock market performance look at the performance over the past 5 years.  Now, guess when far too many investors choose to sell or buy.  (Referring to these people as investors is a bit of a stretch for me.)  If you were smart, investing (saving) on a periodic basis, you can see how well you would have done.

Last year there were more redemptions than purchases of equity mutual funds even though the S&P 500 was up more than 13%.  Looking back, there were not a lot of bullish forecasts from the so-called “experts.”  But now we are seeing numerous articles declaring that “now is the time to get back in the market.”  As a result, we are seeing record purchases of equity mutual funds this month.  When investors declare they are waiting for “things to be clearer” it’s like betting on your favorite team when they are up by 3 touchdowns at halftime.  The only difference is that if you were coaching the team, you would not get to carry that 3 touchdown lead in to the second half.  You would be starting with zero points on the board.  Makes no sense to me, but that is exactly the behavior we see all to often with people saving for their future.

My advice, it’s time to take responsibility for yourself and stop listening to all the peddlers of financial products.  Their self-interest is not aligned with yours, and the sooner you realize that the more successful you will be as an “investor.”

Next I will tell you why this market over the past 10 years created a huge opportunity for the under 55 crowd.  You may have missed it, but with a little courage and common sense you won’t be left behind next time.

4 Comments

Filed under Advisors, Investments, Investors

4 responses to “Is Now the Right Time To Invest?

  1. Great article Dan! As you know investors like to follow the herd, listen to the media and all sorts of bad behaviors. It’s up to us as Financial Coaches to help investors “invest” and not gamble.

  2. Frank Lehane, Fullerton CA

    “Last year there were more redemptions than purchases of equity mutual funds even though the S&P 500 was up more than 13%.” (Big sigh). Lemmings on the march to the prognosticators’ tune which seems to change as often as the wind. May the investors have ears to hear and eyes to see the error of this Wall St. created folly, and turn to our better wisdom!

  3. Well said. I’ve missed these blog posts recently. You have a way of simplifying things and clearing away the investment rubble so that normally esoteric principles are accessible, even welcoming, to your average person. Thanks for the insight and the clarity. You need to write a book – a “One Up On Wallstreet” (if you will) for 2013. -Dave

  4. Deborah Foster

    Hi Dan, Great article. I’ve missed hearing from you. I hope you had a great Holiday Season. Have you been traveling? How is your hip? Will you be able to move into your beach house this year? Let me know next time you and Irene will be in LA. It would be fun to see you. Much love, Deborah and Steffen

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