Saturday, January 28, 2017

Dow Breaks New Milestone!

On Wednesday the Dow Jones Industrial Average broke a new barrier. For the first time yet it crossed over the 20,000 point marker. This was a pretty big deal and it has Wall Street celebrating. The next day I saw the poll above that asked if you would be buying, selling, or holding now that the market was at record highs.

The problem I had with this poll is that it needed an option for those of us who don't plan to change our strategy. My investment strategy isn't dependant on how high or low the market gets. I invest in my 401(k) consistently throughout the year. On the first day of every month I invest in my Vanguard account on the first day of every month. This amount varies, but it is always as much as I feel the we can comfortably tie up in the market long-term.

Since I was in the category of holding my market strategy constant I selected the "It's time to hold" category. I'd like to think that three were several others in the 54% that make that selection that felt the same way.

While this was just a little survey that I ran across it did bring up a few concerns in my mind that I wanted to address. First, they are basing the timing of this question on the assumption that people will change their market strategy based on what the market is doing. But in the personal finance world everyone knows that the best strategy is to not try to time the market and to just consistently invest regardless of what is doing.

My second concern was that 17% of the 183,648 respondents said that it was time to buy. I can understand people saying that it's time to hold or sell but, unless you consistently buy for the long-term, it's not the best time to buy. My fear is that the majority of those 17% are thinking that the market is heading upward so they need to get in on it for fear of missing out on potential returns. Those are the people in danger here because they are sitting that they act on emotion and a hope to find the market, and history shows that they are the ones that consistently lose in the market.

My hope is that all of you out there don't get caught up in any of these common traps and will have the control to set a solid investing plan, sick with it, and let the market swings fade to background noise.

I'm sorry if this post seemed to ramble on a bit, I write it out on my phone real quickly while sitting in a meeting, and it's real hard to edit much on a phone post. But whether or not you found anything I said meaningful, I hope that you were able to at least look at the picture and gleen some valuable insights for yourself.

No comments:

Post a Comment