Recently, we were reminded of just how unpredictable the market can be. And while we can’t really control the market, we can remember some basic fundamental truths1 that will help us weather any storm.
Twelve fundamental truths of investing
1. Over the long term, stocks have had greater total returns than bonds.
2. Over the long term, bonds have had greater total returns than money market funds.
3. On average, stocks are much riskier than bonds.
4. On average, bonds are much riskier than money market funds.
5. You will make investments that go down immediately after you buy.
6. You will sell investments that continue to go up after you are out.
7. You will hold some investments too long.
8. The value of opportunities missed will dramatically exceed those in which you participate.
9. Someone, or some group of people, will always do better than you.
10. You don’t pay a financial adviser for information – you are paying for knowledge, wisdom and personal guidance.
11. Accept uncertainty. No one knows where the market will be next week, next month or next year.
12. Money can only be made in the future – it’s impossible to invest in past returns.
So, the next time we find ourselves in the middle of a storm, don’t panic — just pause, take a breath, and remember that we’ve been here before and we’re likely to be here again. History has shown us that no matter how far stocks have fallen, they’ve always rebounded. Keep the information you learned here in mind and recall the plan you’ve created for situations just like this.
1 Source: Horsesmouth LLC, www.horsesmouth.com.
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Green Valley Wealth Advisors | July 30, 2009