What’s Happening With the Stock Markets?

Any suggestions and illustrations in this blog are not intended as financial advice. They are my personal opinions.

Last Thursday, as I was thinking about a topic to write about, President Trump issued an executive order imposing huge tariffs, Congress was considering a huge tax cut, the stock market had huge losses, and the Treasury rates dropped. While these were just the headlines, the financial news programs had every “expert” they could find offering their opinions of why it happened.

I felt that I should address these incidents and decided to write about the big picture or primary purpose of investing, whether in the stock market, fixed income or whatever else you might feel appropriate for you to attain your eventual financial security.

I keep saying, and some readers are probably tired of reading it, but investing should be to secure your long-term financial security. In my opinion, trading is not a sustainable strategy unless you are a professional trader, and then it’s your job. I advise clients on long-term strategies to attain their goals and not on making quick profits trading.

When you look at things with a long-term view, it looks different than how it looks currently. In the long term, blemishes, bumps, emotions, reactions and fear look smaller and less important. If you have a long-term strategy, you should be concerned about the sustainability and growth of the expected cash flow and the protection you have from huge sudden drops, which are likely temporary.

If you do not feel the losses will be recouped and the drops appear to be massive changes in your assumptions for the future of the economy, then you need to consider how it would affect your plan. That should cause you to relook at your plan and develop a new strategy based on what your new assumptions are.

When deciding on a strategy or making a significant change, you should ask yourself, “What happens if I am wrong?” and work that out. Asking yourself, “What happens if I am right?” is also a good question.

Consider your answers to the above questions. If you become pessimistic, then develop a new plan before making any changes. You should have some confidence in your opinions since switching away from a carefully considered plan because of something that might turn out to be temporary, or that is caused by a sudden or unexpected political action, or that possibly would not have a lasting effect on your eventual financial security is not a sound strategy.

No one knows what the future holds. We know what we would like it to be, but that cannot be guaranteed. We just need to do the best we can with what we know. But make sure that what you know are the right things to know. And make sure your advisors know what they should know and that they did the work to arrive at their suggestions for you.

Do it right! Make the effort! And understand how you could make or lose on any changes you initiate versus staying still.