The current partial Federal government shutdown that now extends over 30 days is another example of the type of uncertainty that investors must deal with.
Investors never know what kind of news is coming next, as no one can predict the future.
Investors sometimes say they will invest more in stocks or get into the market when there is “less uncertainty.” When will that be?
Is there ever a period where there is no uncertainty? We don’t think so.
There may be times when the markets are not as volatile, where there are not wild day-to-day swings…but that does not mean that the markets are more “certain.”
When can you really be certain about the near-term direction of the stock market? We don’t think that you can truly be certain about the short-term direction of the stock market, whether its US or global stocks.
If investing in stocks is uncertain in the short term, say days, weeks, months or even a few years, then you must develop a way to handle the uncertainty and volatility that comes with investing in stocks.
We think the best way to cope with the uncertainty in stock investing is to develop what we refer to as a rationally optimistic and long-term mindset.
- You should strive to focus on the long term and not on day to day news events.
- You should not focus on whatever the current issues or crisis that the financial markets are dealing with and not try to analyze what the ramifications are or could be.
- You should focus on what you can control, such as the percentage of your assets that are allocated to stocks, not on things which you cannot control.
- You should remember that in the long term, stocks have trended higher, not lower. Stocks have had more up years than down years. This leads us to be rationally optimistic for the long-term.
- You should talk with a financial advisor who could help you deal with the uncertainty that is inherent in investing.
While we cannot predict when the government shutdown will end or what the S & P 500 Index will be in 6 weeks, 6 months or 6 years, we can strive to help you deal with the uncertainty that comes with investing.
Talk to us. It could be beneficial to you.