If you follow the markets day-to-day (and I strongly suggest you do not), then you are probably feeling a bit queasy lately.
Food doesn’t taste as good, your shoulders are sore, and people might be giving you some extra space.
This is no way to live.
In fact, if you are investing this way, let me be clear, you are doing it very very wrong.
Market-related investments are impossible to predict in the short term. If they weren’t, everyone would be doing it! Instead, over any extended time period, everyone gets short-term movements wrong. Yes, everyone.
There are mountains of academic research that back this up, but you don’t have to go read all that stuff to know this. Instead, simply ask yourself:
If anyone could truly predict markets in the short-run, trade on them, and make money, wouldn’t we know it by now? Wouldn’t that person be the largest, …no wait, the only money manager to exist today? Why would anyone hire anyone else?
And if that person didn’t happen to be a money manager, wouldn’t they quickly become one? I mean, they might be happy only investing their own money, but wouldn’t they quickly see how much more wealth they could gain by investing for others too?
No, there are no one-eyed men in the sea of blind short-term traders.
However, over longer terms markets are quite predictable. Structuring your portfolio with a long-term view that you can maintain when the next crash comes is the only way to invest.
Also printed in Blackhawk Living Magazine