A Generational Dose Of Financial Reality

Financial wellness is difficult to achieve without steeled resolve for fiscal self-preservation and an endlessly skeptical nature about the information provided by mainstream financial media.

You as a saver, investor, and commander of assets and liabilities that steer the household balance sheet toward achievement of financial milestones such as retirement planning, must carefully navigate popular financial advice which has progressively morphed into statistical click-bait.

The stock market is sliced and diced to present its prettiest façade. Investing time frames that I argue best fit the lifespan of vampires not humans indeed connect to consistent double-digit returns.

Statistical foreplay makes it easy to promote risk assets like stocks as the solution to every financial ailment. I posit this sentiment is fueled hot by overconfidence, a backstop provided by a Federal Reserve that listens to and fears market downturns and recency bias as professionals have forgotten the damage created by bear market cycles.

New advisors and brokers are convinced that bear markets are occurrences of the past and trained by their big box brokerage allegiances to perceive them as great opportunities. For young investors market derails may be opportunities; especially for those who are in accumulation mode and seek to purchase stock shares at lower prices. For people near or in retirement who require investment account distributions, a bear market can be devastating to the longevity of portfolio assets.

When (if) bear markets occur, every investor trades time for dollars. So, what is your time worth? How much of your overall portfolio should be allocated to stocks if you consider how long it may take to make up for losses? If you consider risk first, reward second, especially at a time when market valuations portend to lower future returns, outside of the media telling you to “eat your stocks!”, what do you believe is right?

Search for the truth. It’ll crystallize sane thoughts. Understand how long it can take to break even from market disconnects and decide accordingly.

 

I’ve been studying individual stocks since I was 16. When I was 12 years old, I called the Dreyfus mutual fund company to receive information on a money market named Dreyfus Liquid Assets (ironically, I worked for Dreyfus from 1990-1998).

1 2 3 4
View single page >> |
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.