I am guilty of having strong and stubborn convictions, so if you want to hear some truth sprinkled with a little sarcasm about a topic that is often on my heart and regularly on my lips, gather around like a baby pig at the state fair, and let’s roll.
The repeated phrase that makes me want to paint myself with honey and jump in a nest of fire ants is, “Stocks are booming but the economy is so bad. Something is not right.” The only thing that is not right is that you are trying to figure out why (sarcasm). Daaang it, don’t do that to yourself! It’s not worth it.
Instead of getting into the weeds, just remember five words: Stocks are not the economy! Mike Santoli, from CNBC, was spot on when he said, “In 2020, as the virus surged, economic growth crashed, unemployment shot up, poverty spiked, and democracy crumbled, what happened to stock prices? They soared to record highs, of course. Why? As is usually the case in economics, it’s complicated — and everyone has a pet theory.” If you want to nerd out and read some of the pet theories, simply ask Mrs. Google and she will be happy to oblige you with a truckload of articles that will likely satisfy your nerd instincts, albeit at the risk of possibly reading the wrong article that makes you divert from your well-balanced and prudent game plan. Therefore, proceed with caution at your own peril.
There will always be plenty of news stories to support bearishness and bullishness no matter our political viewpoint. Regardless of how we slice it, there are always two sides, so we need to take what we read with the proverbial grain of salt, as most peeps have an agenda.
Nevertheless, I steadfastly argue that we should focus less on the short-term news headlines and market volatility while seeking more wisdom from what history teaches us. For example, as I have questionably preached way too many times, history has clearly shown that the stock market always goes up over time, always has and likely always will, albeit, not in a straight line, of course.
Moreover, since we cannot predict when the stock market will rise or fall, we must toughen up mentally. Yep … Toto, we are not in Kansas anymore! We are in the big leagues now.
Investing is often a dangerous business, especially for the ones that believe he or she is smarter than Mr. Market. Don’t play that game. Instead, let’s be real pros and handle the wild ride akin to the Oracle of Omaha, Warren Buffet.
The declines in stocks are always painful and are often gut wrenching, but if we focus on history, keep the faith and stay the course while ignoring the pouting pundits of pessimism, we should be just fine, at least that is what history teaches us in spite of talking heads who scream from the rooftops that Armageddon is near. Let’s keep our itchy finger off the trigger and just relax. Let’s stop overthinking. The stock market is a remarkably powerful wealth-building tool, but far too often, we, as investors, repeatedly mess things up by thinking we can outsmart it. I should know, I have the scars to prove it from back in the day when I was naive, wet behind the ears and just plain stupid. Please don’t be like the younger me!
Harry Pappas Jr. CFP®
Managing Director-Investments
Master of Science Degree Personal Financial Planning
Certified Estate & Trust Specialist ™
Certified Divorce Financial Analyst™
Pappas Wealth Management Group of Wells Fargo Advisors
818 North Highway A1A, Ste. 200
Ponte Vedra, Florida 32082
904-273-7955
harry.pappas@wellsfargoadvisors.com
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