Not taking action IS taking action! Small adjustments rebalancing is also taking action. Accelerating annual retirement account contributions is taking action.
The data shows that any time is a good time for value. There’s not a way to reliably and accurately predict what will happen in a particular year. Yet, the “prediction pundits” will continue making predictions each year.
Check out these examples of saving $5000 and growing it in the market over 45, 35 or 25 years. The difference is astounding! Yet, this is the basic math of growing wealth over time in the market. “Simple, inevitable wealth”
Reaching a new high doesn’t mean the market will retreat. Stocks are priced to deliver a positive expected return for investors, so reaching record highs regularly is the outcome one would expect.
Global markets, in the last 12 months, performed strongly with our model portfolios made up of 40%-100% global stock up from 13% to 34% and a slight cooling in Q3.
The past three decades have been a period of relatively moderate inflation in the United States with the annual increase in the consumer price index averaging around 2.3%. Yet the impact of even this amount of inflation has been to reduce the purchasing power of an uninvested dollar by around half.
A look at headlines from the past 50 years shows the difficulty of timing markets around inflation expectations. Investors may be better served sticking to a long-term plan.
Inflation is handled with a stock portfolio and for those with concern about the volatility of stocks, inflation hedges like TIPS (treasury inflation protected securities) are smart. (This is what we do.) As always an ongoing long term and short term rebalancing strategy is additive.
