Amy's Bold Market Predictions for 2015
The stock market will go up...and down.
Bond yields will rise...and decline.
I'm always fascinated this time of year as every so-called financial "expert" on TV or in print feels the need to proclaim their prediction of what the markets will do over the next 12 months. I find that some of them provide interesting insights and are helpful in understanding our economic world. Others provide entertainment, like those headline-grabbing windbags who claim that Armageddon (or a 100% return) is just around the corner.
However, I worry that listeners may take these predictions as gospel and adjust their investment strategy according to whichever guru they happen to be following. They believe these "experts" know more than they do and therefore can predict the future. How silly is that?
No one can predict the future. I mean, think about it. If they knew for sure what was going to happen in the future they would be keeping that information to themselves while trading their own account. They would be at home sitting on their piles of money and not sitting in the CNBC studio telling anyone who would listen to them what to invest in during the next year.
Be an investor...not a trader.
Instead of trying to guess what the next 12 months hold for the economy, just be resigned to the fact that stock and bond prices will go up and down over that time period, maybe a little and maybe a lot. As long as you are in a well-diversified portfolio of reasonably-priced mutual funds and ETFs you are best prepared for whatever the markets throw at you.
So remember, if your portfolio is well-diversified and invested in well-run and well-priced investments that match your risk-tolerance then sit back, relax, and let it do its job. If you're not sure if it meets this criteria, give me a call and I can help you whip it into shape.
Oh, and...HAPPY NEW YEAR!