The U.S. stock markets are currently at price levels last seen in December 2007. With all the bad economic and fiscal cliff news floating around the last few months, how can that be possible?
Most Minnesota investors that I talk to are not confident about the forecast for U.S. economic growth and company earnings in 2013. The same goes for their lack of confidence in any new policy or direction from the Federal Government.
Many individual company retirement plan participants have not taken full advantage of the stock market at multi-year high price levels. These investors have not been fully invested, or correctly invested, in the U.S. stock market recently due to their perception of the poor economic environment and lack of a clear direction from Washington.
The U.S. stock markets don’t wait for individual stock market investors to feel more confident with their investments. The stock market will go the direction it wants to go, and individual stock market investors need to adjust their risk levels accordingly.
Emotions are the reason that most individual investors don’t get the stock market investment returns available to them. The recent memories of the 2008-2009 stock market crash and the U.S. economic slowdown that followed have created a negative emotional climate for individual investors. Those emotions have hidden the real facts that the U.S. economy is improving; and that optimism has been reflected in U.S. stock market prices over the last few months.
When your emotions lead you to investment management decisions that don’t accurately reflect the reality of the U.S. stock markets, it is time to learn how to better manage those emotions.
Most individual stock market investors never learn that their emotions are their worst investment performance enemy. It has taken me most of my 29 years as an investment advisor to learn to help my clients separate their emotions from stock market reality. This separation has improved their stock market investment returns in most cases.
All stock market investors need a long-term investment strategy that manages their emotions. Not having this strategy has likely resulted in your stock market investments returns lagging the current multi-year high price levels.