Let me start by stating one can gain investment know how (knowledge) by reading books listening to podcasts, and studying investment materials. In the same way one can learn to walk a tightrope by practicing in the backyard on a rope 6 inches off the ground. You can become very good at navigating that tightrope in the backyard. When the tightrope is strung between two buildings 300 foot off the ground that "experience" isn't as valuable.
Welcome to the complex yet fascinating world of investing. Like you, I am an investor and over the past five decades, I've had the privilege of witnessing the intricacies of financial markets, making my fair share of mistakes, and, most importantly, learning from them. As you embark on your investing journey, I'm here to share with you the ABCs of investing, with a touch of wisdom gained through experience.
Below is a recent (June 1, 2023) Economic Outlook diagnosis from the folks at Capital Group. A few highlights and a link to the entire article (10 minute read). Link to short report, Economic outlook: Mild recession, strong recovery.
Every few years we have this discussion about whether or not we are going to raise the debt ceiling. Let’s just be honest, the debt ceiling will be raised. Since 1960, it’s been raised 78 times (more than once a year). The chart below shows the times the debt ceiling has been raised since 1970....
As a professional investor for almost 30 years, I rely on my own experiences to help guide my investment approach. Every crisis is different, but they often have things in common. The financial crisis of 2007-2008 was a difficult time for many investors, with stocks and bonds experiencing significant losses. While it’s impossible to predict...
Although there is no foolproof formula for investing success or failure there are traits that those who do well over the long term possess. As a financial planner with 25 years of experience, I have seen many investors succeed and others struggle. Through my experience, I have identified three primary characteristics or habits of a good investor and three characteristics or habits of poor investors.
Investing can often feel like a daunting task, especially for those just starting out. But with the right approach, it can be a rewarding and fulfilling journey. One way to think about investing is to see it as following a treasure map. With every step along the way, you'll encounter challenges and obstacles, but if you keep your eye on the prize, you'll eventually reach the reward at the end.
Predicting the direction of the market is like predicting when you will hit the bulls-eye in a dart game. The majority of the time throughout market history, the markets have been rising. History shows that the chance of your money growing in a diversified portfolio of stocks and bonds is much like the odds of your next dart hitting any number on the dartboard... except the bulls-eye. If you are going to try and time the market by moving your money in and out, you have to ask yourself how confident are you that you can hit the bullseye when you do.
In simple terms, speculators are trying to out-smart the markets while investors simply participate in the markets. The investment time horizon is also a very important factor as speculation tends to be over the short-term while investing is over the long-term.