It’s that time of the year when the investment media trots out its predictions for 2018, seemingly coming to our aid with headlines of “What you need to know in 2018” and “Invest in ____ if you want to be successful.”
We’re not big on investment prognostications or reactionary investing based on a change in the calendar. We prefer an investment philosophy that works consistently under any set of conditions. With that in mind, we offer up the Woodward Financial Advisors reactions to some fairly common investment headlines making the rounds this time of the year:
Hedge fund “X” is moving into currency trading.
Better them than us. We’ll just focus on investing globally and letting currencies do what they will. That will most likely lead to long term success without over-complicating our investments and costing more than it should.
The Federal Reserve may raise rates this year.
Got it. They may, but they may not, and it doesn’t matter. Even if they do raise rates, we’re not going to alter our bond investments or our stock investments. Did you know the Federal Reserve meets about every six weeks? That’s a lot of meetings to follow and worry about over an investment lifetime.
Company “A” beat earnings and its stock is rising
Okay. We probably own it since we invest in mutual funds with thousands of holdings. If so, great. If not, we own plenty of other stocks that are advancing.
Company “B” missed on earnings and its stock is falling
Okay. We probably own this one too. If we don’t, then we dodged one. And even if we own it, it will be a very small portion of our balanced portfolio, so we’re not going to get bent out of shape over it.
Here’s how to play the upcoming earnings season.
We don’t need or want to do this. This is our long-term money we’re talking about. It’s not something to play around with. We have a well thought out and diversified portfolio built for the long haul.
Big changes in health care are on the way, invest in this…
We might consider changing our health care plan, but we’re not going to change our investments.
Some bank or famous investor is betting big on…
Let them make bets of whatever size they wish. We’re not making bets on a stock or sector regardless of who else is. We’re not going to be swayed from our strategy by some famous person(s) who made a media appearance.
These red-hot tech stocks delivered triple digit returns – buy them now.
We’re not going to chase performance. And besides, shouldn’t we have bought them before they went through the roof?
First quarter profits are up for company “ABC” – buy it.
Noted. Although, this seems like a pretty short time frame over which to evaluate a company, no? Ideally, we like to measure performance over multiple years or even decades.
Some stock market indicator says that it’s time to sell.
And we say that it’s time to stay invested, rebalance and think long term. We’re not going to try to dodge the next downturn by jumping in and out of the markets. Plus, that indicator has said “sell” for five years and been wrong.
The portfolio you should have in an uncertain market is the…
Same one that we should have in any other type of market.