Take The Good With The Bad
A little over a year ago our family decided to take the plunge, and we added Millie, a white lab, to our household.
This little white snowball is everybody’s favorite in our house. If my wife or kids had to choose between me or Millie, I would make sure I had plenty of suitcases ready to go.
The thing about Millie is she never gets upset. She is always happy to see you and her zest for life is unmatched. Unfortunately, even though my wife may think so, Millie is not perfect. She likes to roll in dead fish, she sheds constantly, and she makes it more difficult to travel.
Fortunately for us, the good with Mille far outweighs the bad.
There can be several parallels drawn between my relationship with Millie and the performance of the stock market.
Stay Focused: Keep Your Investments Free from Politics
The stock market is constantly going up or down based on investors’ expectations for the future. Another way of thinking about the stock market is like a pendulum scale with good on one side and bad on the other. Anytime the perceived number of good expectations outweighs the perceived number of bad expectations, the stock market goes up.
Right now, there is a tremendous amount of change happening daily. In 28 years, I don’t remember a time when I had more calls and conversations that held such drastically different perceptions. Half of our calls are from those who are very concerned about the direction the country is going. The other half of the calls are from people who are very optimistic about the changes happening. Regardless of your political beliefs, I encourage you not to make drastic portfolio decisions based on your optimism or pessimism with the current state of politics.
In the 28 years I have been in the business, I can confidently say that the biggest losses I’ve seen were instigated by political beliefs.
The reason I believe that the biggest losses I have seen have stemmed from political beliefs has to do with people thinking they know something that the market doesn’t know. Unfortunately, this is rarely the case. The market adjusts extremely quickly to expectations pertaining to all known variables.
There are several quotes from famous investors that substantiate the difficulty of using expectations to determine how to invest in the short term. One of my favorite quotes regarding this issue is from Burton G. Malkiel’s book, A Random Walk Down Wall Street, where he states, “Expectations about the future cannot be proven in the present.”
Essentially Mr. Malkiel encourages people to avoid using emotions based on expectations when determining investment selections.
As we progress through 2025, Bernicke Wealth Management has several priorities related to portfolio management and financial advising.
We will do our best to provide timely information while keeping a close eye on your financial situation to make sure we accommodate the ever-changing economic landscape with your unique circumstances.
I hope the remainder of your winter goes excellently!
