Hi, it’s Dan Witherington of American Wealth Builders.
The Trump Rally.
No, I’m not talking about Trump’s political campaign rallies, I’m talking about the name being given to the stock market’s all-time high earlier this week.
The Dow passed 19,000 for the first time ever. That breakthrough is a big milestone.
(USA Today has an interesting comparison: Just 4 years ago, the Dow was at 13,000 and one expert said at the time that he believed the Dow could hit 20,000 by 2022. Well we’re still a few years from 2022 so the same expert has revised his estimate and believes the Dow could hit 20,000 by next year.)
For some people, it’s proof that a Trump Presidency is going to be good for the economy. For others, it’s just the high water mark before a massive collapse that’s been in the works for years.
Me? I try to take a bit more of an analytical approach and a bit less of a partisan approach. I’m more interested in what will happen next and how to invest accordingly.
Smart investors will try to see the road ahead and make the right adjustments in their portfolio to be prepared, even if you never really know 100% what’s going to happen. Fortunately, we don’t need to know 100%.
There are only 2 things that could happen – the stock market could go up or it could go down. I’m not trying to be a smart-ass… it’s actually something that many people overlook, surprisingly.
But let’s broaden it out a bit more and say this instead:
- The stock market could go up fast.
- The stock market could go up slow.
- The stock market could down slow.
- The stock market could go down fast.
We don’t really know which it will be (although there are different factors that could influence one or the other). But, we can make some educated guesses and structure our portfolios accordingly.
- If the stock market goes up fast, stock holders win.
- If the stock market goes up slow, stock holders win.
However, I think we can all agree that history tells us something important: When the stock market goes up, it also goes down. Sure, the market can theoretically go higher and higher to an unlimited degree but can be pretty confident it won’t.
That’s because smart money gets in early and then foolish money follows. When foolish money gets in, smart money gets out and the correction begins.
So, even if the market goes up (fast or slow) it will eventually correct. It might not correct catastrophically (when it goes down fast) but it will correct, which means the market could go down slow.
Therefore, we can say this with some degree of accuracy…
- It’s possible that the stock market could go up fast.
- It’s possible the stock market could go up slow.
- It’s highly likely that the stock market could down slow, sooner or later.
- It’s possible that the stock market could go down fast, sooner or later.
I’m not trying to scare you by being a so-called “stock market bear” and announcing doom and gloom. But I am a realist who has been through market ups and downs and I believe that even aggressive market optimism is eventually and inevitably offset by declines.
So, what should you do?
Well, if you own stocks and feel that A or B are likely for the near term then don’t let me dissuade you from owning stocks in your portfolio.
And if you feel confident that you can watch the market and act efficiently to sell when the market starts to decline (C) then again, you may want to continue holding stocks in your portfolio.
BUT… I know the market will rise and eventually correct. And, I know that stock holders may not always want to or be able to read the economic tea leaves to act accordingly. And, I know that in the case of a fast downward spiral, it can be hard for the average investor to sell quickly.
For that reason, I love having something a little safer and secure in my portfolio – a hard asset that preserves capital.
And THAT is why I love turnkey real estate investments. Because I’ve seen the market at its best and worst and I know that the best is good but short-lived and the worst can be very, very costly for anyone but those who can watch the markets 24/7.
Again, I’m not advising you to do anything. But as a former Wall Streeter and a current real estate investor, I know there’s only one investment I prefer that helps me sleep soundly at night no matter what the market is doing.
So give me and the team a call here at American Wealth Builders and let’s talk about how your investment portfolio might be protected and diversified out the stock market with a cash flowing turnkey real estate investment.
Senior Wealth Strategist
American Wealth Builders
- Protestors And Profits - January 30, 2017
- Urban Myths Of Real Estate Investing - December 31, 2016
- Why Investors Are Leaving Mutual Funds For Real Estate - December 24, 2016
- Stop! Read This Before You Make Another Real Estate Investment - December 17, 2016
- A Better Retirement Strategy Than You See On TV - December 9, 2016