by Jesse Anderson, CFA
What are you nervous about?
– European Crisis
– Chinese Economic Slowdown
– Our November Presidential Election
– Massive Budget Deficits
– 16 Trillion in National Debt
– High Unemployment
Do I need to continue?
Can your investment plan handle all these risks? Have you made the appropriate changes to handle what seems like an endless list of uncertainties? Of course not, that would be impossible. Instead, many investors have remained frozen or turned to the ‘safety’ of cash to preserve their wealth. Unfortunately, these are not solutions to today’s problems or likely to help you achieve your future goals.
In recent years retail investors have been through a Tech Bubble and a Financial Crisis. It has left 401(k)’s and retirement accounts at a fraction of their one-time high values. The current time period is being labeled as a “Crisis in Confidence”. These days investors want to get their hands on any investment other than equities. Andrew Ross Sorkin of the New York Times offered one of the simplest explanations, “it [stock market] has been a losing proposition. An entire generation of investors hasn’t made a buck.”
Although that may not be entirely true, it is the common consensus among investors. Nearly all the articles you will read on the crisis of confidence and the professional money managers who write them agree, the world is not coming to an end. Just like every other time in the past, investors will return to the stock market when faith in the long-term is regained. What can’t be stressed enough is by then it is too late. The ship will have already left the port, and the stock market will be in a much better position. Euphoric purchases will be made at the end of the next bull market while despair and disgust lead to sales at the end of a bear market.
I realize there are many things to be nervous about. However, I also realize most of those things are outside of my control. I can implement a wise investment strategy; a strategy that manages the risks of the stock market and the emotions of the investor. A strategy that is working for you, rather than sitting idle in out-dated mutual funds or cash. The Snider Investment Method has been through bull and bear markets. It survived the disasters of the last decade. The endless list of uncertainties will never go away. But, a good investment plan and strategy can allow you to rest easy at night as well as participate in the market’s upside potential if the current crisis of confidence turns out to be nothing more than another false alarm.