There has been no shortage of gloomy opinions published about the future direction of the stock and bond markets recently. While we agree that there are plenty of things to be concerned about, it is our view that most of these headlines - positive or negative - amount to little more than "noise" when it comes to the long-term performance of client portfolios.
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| Ignore the Noise |
That's not to say that there isn't a bear market in our future. This current bull is long in the tooth and after every bull comes a bear. That's just how it works. However, anybody planning to profit from market forecasts is literally a "dreamer."
For decades, Wall Street has been trying to figure out how to accurately predict the future and they have failed. The academic community has spent the last 100 years studying investment returns and has found no evidence that suggests that anyone or anything can repeatedly and reliably forecast the markets. When it comes to the short-term direction of the financial markets, there is no "crystal ball."
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| There is no Wall Street Crystal Ball |
Fact: There are always going to be reasons to be afraid of the markets and there are always going to be reasons to be encouraged by the markets. If we had a way to reliably time the markets for clients and produce the long-term returns to reach your financial goals, we would be doing it. 100 years of academic research and Wall Street's poor market-timing results prove that a globally diversified mix of many different stock and bond asset classes with targeted percentage allocations produce better long-term performance results.
We employ an investment strategy that does not require that somebody predict the future in order to be successful. We use low-cost, globally diversified allocations to access the different assets classes. Then, we tune the asset allocation to match your goals and your risk tolerance. Each asset class has an assigned target allocation and when market activity pushes the allocation far enough away from the target we rebalance back to the target. This rebalancing actually takes advantage of market volatility by having us sell high and buy low.
This kind of approach has repeatedly been demonstrated to produce the best, most reliable long-term results. However, it is important to understand that it is not the objective of the strategy to never own something that is going down in value. In fact, since we are trying to own a little bit of everything, there will always be something going down in value.
While this investment strategy is relatively "simple", it is not "easy". When the bear market comes or we read scary articles, our "fight or flight" instinct kicks in and we feel compelled to take action. This is where human nature can undermine years of planning and saving if you do not have an investment strategy that is built to weather all storms.
Your investment strategy is time tested and you have the Denver Money Manager team of advisers here to help get you through whatever comes next. So don't let the noise cost your any sleep!
