The U.S. stock markets are now at multi-year high price levels. All Minnesota investors should take the time to ask themselves these four important investment management questions about their current stock market investments.
Your past stock market mistakes have been wiped away in the recent stock market advance. Now is the best time to make sure you don’t make the same investment management mistakes going forward that you have made in the past.
I am not suggesting that you drop what you are doing now in order to “sell everything” that you own in the stock market. I do think that taking a few minutes now to think about these four questions will go a long way towards helping preserve your current stock market gains.
More importantly, your answers to these four questions will go a long way in preventing you from riding the stock market back down again.
First, what do you think that the overall trend of the U.S. economy will be for the next couple of years? You can bet that the stock market will lead to the downside as soon as the U.S. economy begins to slow down. The professionals who study the stock market every day will sell their shares as soon as they see any signs of economic slowdown. Those actions will then begin the next stock market decline.
Second, do your current stock market investments reflect the best options available to you? This is an especially important question to think about in regard to your current company 401(k) retirement plan account holdings.
Every company 401(k) retirement plan investor owns a mutual fund or two that has not kept up with the overall stock market advance. There probably are a handful of better stock mutual fund options available to you on your company 401(k) retirement plan account menu. Find out which ones they are.
Third, where do you think interest rates will be in the next couple of years? The stock market has been going up for the last several years because the Federal Reserve has kept interest rates historically low. When interest rates begin to rise again, bond prices will fall. Stock prices will have to adjust to rising interest rates at some future time.
Last, are you still making your investment management decisions base on what you hear and read in the financial media? I am glad that you took the time to read this blog post if you are.
It is always a good day to buy into the stock market if you listen to financial cable TV or read financial web site commentary. When the financial media talking heads get their investments wrong, they don’t get invited back to talk on TV or to write an internet investment column. The lack of accountability of the financial media is the main reason that every day is a great day to buy stocks.
As an individual stock market investor, your stakes are much higher. When you get your stock market investments wrong, you can lose years of stock market gains in a few weeks.
Ric Lager
Lager & Company, Inc.
