As a long time reader of Sports Illustrated, “Go Figure” is the name of one of my favorite features. “Go Figure” is a collection of interesting and surprising statistics.
Investment News, a publication for financial advisors, had the following items in their “Go Figure” section in the June 15, 2009 issue:
*80% of institutional investors (professionals, pension plan managers, etc.) thought the S & P 500 index will return to 1,200 by the end of 2011. It is currently around 895. That would be an increase of 34% from today’s level.
*However, in an Associated Press poll, 52% of the people surveyed thought that now is a bad time to invest in stocks.
While we do not believe in crystal balls and cannot predict the future, think about the above 2 figures. If an item is on sale, people are more likely to buy it. However, when it comes to stocks, many people will invest only when it “feels right.”
Our role as financial advisors is to help our clients have the discipline to adhere to their financial plans. We assist our clients in being able to stick to their planned asset allocation. This discipline can lead to buying low and selling high.
So even if it does not “feel right” to be invested in stocks now, we think it makes sense for investors, after analyzing and determining an appropriate investment plan, to purchase stocks now or maintain their stock positions for the long run. By doing this, if the market does increase as many professionals above predict, our clients will benefit. They will not benefit by sitting on the sidelines waiting for “the right time to invest.”
We’ll check back in 2011 and see who is right!