I couldn’t help but draw parallels to the topic of investing in the commentary that I read in Friday’s Philadelphia Inquirer about the snow storm that didn’t happen last Wednesday. To summarize, at the conclusion of the column, the writer suggested the following: “It’s time for news stations to admit that they either (a) don’t know what they are doing when it comes to forecasting weather. Or, (b) are indeed trying to create a frenzy with their coverage to boost ratings. Either way, a more moderate approach is in order”.
So how does that tie into investing?
First, the investment community has a tendency to pretend that they know exactly what the markets are going to do, don’t they? After all, they are the “experts” and experts always know, don’t they? But, just like mother nature, most of the time financial markets don’t necessarily perform as planned. As advisors, we come from a place of NOT knowing, because we have no idea what the markets are going to do – anytime!
Secondly, the media coverage of the markets fills the airwaves and print with noise that influences people to do exactly the wrong thing at exactly the wrong time. For example, stocks are on a roll the past couple of weeks – better jump in now, right? After the fact? Not sure that is necessarily a wise move! But, we have no idea what the markets are to do, remember.
So, YES, it might be time to take a more moderate approach to investing by simply diversifying so that a coming storm doesn’t get you all wet!
