One of the most common questions I get on a daily basis is—will the stock market go up or down in the near future? My standard response to that is—it’s going to go up OR it’s going to go down. Pick your direction. If the stock market was predictable from one day to the next, then we wouldn’t have the Powerball! We would all be independently wealthy.
Recently a client came to me with this very question. His concern came from an article he had read. He told me how the article claimed that JP Morgan and Moody’s came out and said, “Oh the markets going to CRASH!” That’s the word he explained the article used—CRASH! Really?
Now, in the defense of JP Morgan and Moody’s I couldn’t find anything that actually said this statement should directly be attributed to them, but my client had seen this article published by a major news organization. Interestingly enough, once I found the article, the headline did read, “JP Morgan and Moody’s say the market is going to crash!” However, when you actually read it there wasn’t even a direct quote. The article basically just said according to so and so analyst, the market may go up or it may go down. My thought was “Come on! That’s what these organizations do.” They use these tantalizing headlines as click bait to pull us in.
In my Google search on this subject, with JP Morgan and Moody’s as keywords, over a six month period, I found four or five direct flip-flops on this particular question. One month an analyst would say it’s about to go up. The next month someone would claim it was about to go down. Then again the next month they predicted we would see a 3% increase, only to suggest a 3% decrease the following month. There was so much back and forth, it was hard to make heads or tails of when the market was going go up or down.
Do you see where I’m going with this?
Which article/pundit do you want to believe this month? That’s basically what you are looking at when you ask whether the market is going to go up or down. You want to know, but the problem is no one knows. Not me. Not you. And neither do any of the so-called financial experts that claim they do! No one can predict the future!
There is no way to figure out how thousands of companies are going to project or what the buying populace is. It’s just not going to happen.
If you’re not worried about the immediate dip or rise in the market, don’t—especially if it’s not going to directly impact your financial goals. If you are stressing about it, then it is more of a risk tolerance question.
You need to look at your portfolio and talk with your CERTIFIED FINANCIAL PLANNER™ to see if your investments are allocated within your risk tolerance—historically speaking. That is key to helping you yield the returns you hope for. Obviously, you need to keep in mind that past performance is not indicative of future results. However, if the portfolio, historically speaking, has yielded the return, a conservative return even at that, that will meet your long-term objectives, then stop the insanity! The market is going to do what the market is going to do.
We don’t need to worry about that. Life is hard enough just deciding what’s for dinner! Don’t worry about figuring out how to deal with a bear or bull—depending on the day! Finances don’t have to be difficult. Let’s continue to make our life Financially Simple.