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Alex Bentley
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My grandfather was a WW II war correspondent for a newspaper called The Daily Telegraph, based in London. He spent part of the war with General Montgomery chasing "The Desert Fox", Field Marshall Erwin Rommel, as the allies fought the Germans in Africa. His office was a fascinating... More
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Baldwin Partners Group, LLC
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Baldwin Partners Blog
  • Should I Invest In The Market Now? 0 comments
    Mar 13, 2013 3:13 PM

    I spoke to a woman the other day who was worried about the market and cashed out a while ago. I had lunch with a friend who had done a similar thing. This is all too common. I've had numerous conversations with people who are moving retirement money they will not need for years in and out of the market.

    All these people, as well as other potential clients, have asked me the same question -- "Should I invest in the stock market now?"

    The answer to this question is simple. I don't know. Moreover, no one knows.

    I can understand why people would ask this question. Personal finance sites are always filled with articles saying the market is heading up or down, hitting highs or lows, etc. Lots of people spend a lot of time prognosticating on where the market is going. Many serious looking people are on TV saying the market is fairly valued, overvalued, or undervalued. This causes a lot of second-guessing. No one wants to put their money into something that they think might go down and everyone wants to feel they are investing at the right time.

    It seems that most personal investors are consumed with trying to time the market. They are putting all of their energy into an aspect of investing that they can't control -- what will be the return of the market and when is the best time to get that return? They are driven by fear or greed, feeding into and drawing from the current market sentiment. They jump in and out of the market, trying to get the up market while avoiding the down market.

    These people are doomed to failure.

    A pet peeve of mine is people who point out a problem without presenting a solution. So I've told you want you can't do and perhaps insulted you by doing so. So what is my solution?

    I suggest that you focus on what you can control. In investing, that would be your asset allocation, your investing costs, and your taxes.

    Choose an asset allocation that fits your age and risk profile. Consider your "age in bonds" as a starting percentage and adjust from there. Invest in diversified index funds that are low cost and extremely tax efficient. Look at your portfolio in January of every year, rebalance if you are 5% off your target, and change your asset allocation every five years if necessary.

    Spend the rest of your time golfing, biking, snowboarding, or whatever makes you happy. Don't waste your time with daily market movements. Don't wake up in a cold sweat in the middle of the night thinking about the latest financial crisis. And never ask the question "should I invest in the market now?" again.

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