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When is a good time to put more of your savings into the stock market?[1]
This question stresses us out because, for as long as most of us can remember, the market has usually been in one of two states, neither
How I Learned To Stop Worrying And Love The Market
Summary
- It's rarely comfortable to invest in stocks, as markets are usually near highs or in downturns, making timing feel stressful.
- Relying on market highs or lows to guide investment decisions is unwise; these 'comfortable' moments are historically rare.
- A better approach is to focus on stocks' long-term expected return over safe assets—if the excess return is 3%+, maintain significant stock exposure.
- Building a plan around long-term expected returns, not short-term sentiment, helps investors stay the course and make better decisions.
Victor Haghani has spent 30 years actively involved in markets and financial innovation. He started his career in 1984 at Salomon Brothers, in research and then in the Bond Arbitrage group run by John Meriwether. Victor was a founding partner of LTCM. After a 10-year sabbatical from the investing business, Victor founded Elm Wealth in 2011 to help investors manage their savings in an efficient and disciplined manner, and to capture the long-term returns they ought to earn.Victor has published research on a range of financial topics, but his main interest has been on trade sizing and Portfolio Choice and Lifetime Consumption. His most popular lecture is a TEDx talk titled "Where are all the billionaires, and why should we care?"
Analyst’s Disclosure:I/we have a beneficial long position in the shares of ELM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Portfolio Manager of ELM ETF.
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