This week, the DJIA, an index of 30 large US stocks, is around 22,000.
On June 10, 2014, over three years ago, when the Dow was 16,946, we wrote the blog post below: It is as relevant today as it was 38 months ago.
During the same time period, the S & P 500, a broader index of 500 US large companies, increased from 1,936 to 2,475.
While we recommend a globally diversified portfolio of stocks, small and large, International and US based, the increases in US and International stock indices have been significant since June, 2014.
What should you do now, with the stock market near an all time high? (written June, 2014)
With the US stock market at or near an all-time high, should you be making investment adjustments now? If you have a lot of cash on hand, what should you be doing now?
The US stock market, as measured by the DJIA (Dow Jones Industrial Average) closed at an all-time high of 16,946 on June 10, 2014. But what’s even more interesting is where the stock market has been.
The DJIA is almost 17,000 today, but it was around 11,700 less than 15 years ago during January 2000.
Even more startling, less than 25 years ago, in July of 1990, it was 2,900.
Approximately 34 years ago, in February, 1980, it was 904.
This should help to provide you with the proper long-term investment time perspective.
If you are in your 60s, your life expectancy may be 30 years. For a married couple in their 60s it is very likely that one of you will live into your 90s. If you’re younger, your investment perspective should many decades.
Given this life expectancy information, you should understand why your investments in the stock market should have a very long time-frame. You should not be thinking about, or investing for, tomorrow, a month from now or even a year from now. Your perspective should be much, much longer.
You should not be thinking about what the economy or specific companies are doing right now. You should not be concerned with how Apple, Ford or IBM will do this week or next year. You cannot control or accurately predict any of this.
What matters most and what you should focus on is developing a proper, globally diversified long term investment plan, so you and your family can benefit from the world’s stock markets over the next 5, 10, 20 or more years.
We work with clients to develop an investment plan. This is not a fancy document or 40 page bound booklet. We determine the right amount of their money to invest in the world’s stock markets, based on their goals, age, and ability to handle the volatility of the stock market. Then we determine how much should be invested in very small companies, value companies, internationally and in emerging markets. These asset classes provide greater historical returns, yet most investors are vastly under weighted in these investments.
If you are not invested in the stock market right now, yes, we would invest in a globally diversified portfolio for the future. If you are invested now, we would review your portfolio to see if it is globally diversified.
We help our clients simplify their financial lives and consolidate their resources. We enable you and your family to achieve a sense of financial comfort and security. We manage your portfolio with discipline and take the emotion out of the investment process.
Do you have an investment plan? Are you seeing the real financial benefits of investing in the stock market?