The number one question that I get asked as a wealth advisor is “Where is the market going?” It doesn’t matter if it is a client, a prospective client or someone I just met, everyone always seems to want the answer. It’s the Holy Grail of investment questions.
My answer: Who cares!
Let me explain. It’s not that I do not care at all, it’s that it just doesn’t matter for most investors. I think the real question they are all trying to ask is where is the market going in the coming days or weeks. So it is more of a focus on short-term performance rather than taking a long-term perspective.
For me, it is an opportunity to educate investors regarding what they can and cannot control. As investors, you can control your taxes, investment expenses, and your financial goals. You cannot control where the market is going in the short-term. In addition, you cannot control investment performance. We may think we can by the investments we select, but we really have no control over it.
As investors we tend to think trends will continue indefinitely. We think the raging bull market will press higher, and we fear the declining market will continue until we are left with nothing. So we generalize, and ask where the market will go to confirm our jubilation or worst fears.
Let’s face it, the experts in my business with 30 years or more experience, have a hard time predicting the general direction of the markets and economy. George Bernard Shaw said, “If all the economists were laid end to end, they’d never reach a conclusion.” I think he was on to something.
If you have a long-term perspective, that is with a five year or more time horizon for your goal, then what happens in the coming weeks and months in the markets will not matter at all.
So, who cares?