Jay Mooreland, author of one of my favorite go-to websites, underscores my feelings that just about everything that is written about the short-term future direction of the stock market by self-proclaimed experts makes me want to smear myself with honey and jump into a nest of fire ants.
Allow me to explain. Mooreland said in his July 6, 2016, post, “We are bombarded every day with people making predictions regarding the stock market and some of them are right. That is the nature of probability. Do something enough times and occasionally the unexpected or extraordinary will happen. The problem is, we tend to hear only about the ‘winners.’ The same thing happens in casinos.”
The author continues, “You walk through a casino floor, and you hear Ding Ding Ding Ding Ding. Your mind is thinking, ‘Wow, there are a lot of winners. I better get in on this.’ What noise does a slot machine make when it loses, which occurs the majority of the time? Nothing, just like the expert prediction that was wrong again. We don’t notice because we don’t hear it.”
We do not need gypsies with crystal balls, soothsayers wearing wizard hats, palm readers, and stock market pundits with sketchy records of accomplishment providing us investment advice. It cannot be said enough: The best advice, for most people, is boring and dull, so here is a nudge.
In the final analysis, I have no idea of the short-term direction of the stock market, and no one else does either. What happens in the short run is often just “noise” to distract us from our long-term game plan. Don’t take the bait! Stay the course, as the stock market has proven consistently that it moves higher over time. Of course, gut-wrenching declines will happen, which is why you should pay particular attention to the item mentioned above (#6).
During the past several years, the stock market has underscored the notion that bull markets tend to “climb a wall of worry.” In other words, the stock market generally moves higher in the face of “headline fatigue,” which is excessive exposure to negative news from the media. The commentators continue to warn us about everything that could go wrong with the economy and stock market. The songs of doom and gloom bombard us, but in spite of the flood of undesirable broadcasts, stock prices have been moving consistently higher, as they climb the wall of worry, to many people’s disbelief. Remember to keep your itchy finger off the trigger!
Harry Pappas Jr. CFP®
Master of Science Degree Personal Financial PlanningCertified Estate & Trust Specialist ™
Certified Divorce Financial Analyst™Pappas Wealth Management Group of Wells Fargo Advisors
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