DOW 20,000 … the more things change, the more they stay the same!

DOW 20,000. Is that good? Or is that bad? Guess what – this is simply another way point much like DOW 15,000 was, or DOW 10,000, or pick any DOW number.

The Power of the Markets

Markets don’t know your specific emotions and behaviors – so the markets march on ignoring them. It is best to not confuse investing with your emotions – regardless of what news event provokes them within you.

A properly structured portfolio is one that has something in place everywhere and all the time, so when different markets react to new news, your portfolio feels it (and typically the opposite of your feelings) before you do. You simply cannot outguess markets or predict what is going to happen. Therefore, structure portfolios to be flexible and resilient all the time.
Why? And How? Please read the below “The Power of Markets” for answers.

From the inserted article below:

“In 1958, economist Leonard Read published an essay entitled “I, Pencil: My Family Tree as Told to Leonard E. Read.” The essay, narrated from the point of view of a pencil, describes the “complex combination of miracles” necessary to create and bring to market the commonplace writing tool that has been used for generations. The narrator argues that no single individual possesses enough ability or know‑how to create a pencil on their own. Rather, the mundane pencil—and the ability to purchase it for a “trifling” sum—is the result of an extraordinary process driven by the knowledge of market participants and the power of market prices.”

“The beauty of Leonard Read’s story is that it provides a glimpse of the incredibly complex tapestry of markets and how prices are formed, what types of information they contain, and how they are used. The story makes it clear that no single individual possesses enough ability or know how to create a pencil on their own but rather that the pencil’s miraculous production is the result of the collective input and effort of countless motivated human beings. In the end, the power of markets benefits all of us.”
“Any individual trying to outguess the market is competing against the extraordinary collective wisdom of all of these buyers and sellers.”

 

I go back to helping you focus on what really is more important to you … what’s that? Staying on track and doing what you need to do in areas that do affect reaching our goal! Do things that matter towards your goal and ignore those that don’t matter.

 

 

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In the interest of disclosure: I do use DFA sub-managed SA Funds with most clients (not a fund requirement, but a business decision I’ve made).

Analogies that explain the difference between investing and planning (Yes, they are different)! :

PS. At the time of writing this, the DOW was just a few points short of 20,000. The point of this post is not whether the DOW does, or does not, reach or exceed 20,000 (someday it will). The point of the post is that is doesn’t matter because the markets are powerful and nobody can predict them. Why? Because they are made up by all market participants and predicting everybody’s behavior and motivations isn’t possible. Index values are simply waypoints on the market barometer.

About Larry Frank, Sr.

Larry R Frank Sr., MBA, CFP®, is an experienced financial advisor and a published author on Retirement Planning Research. Have a financial question? Click Here to Ask Larry

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