Now that the London Olympics have come to a thrilling conclusion, the upcoming U.S. presidential election will now take center stage in the U.S. media. The current state of the economy and financial markets in this country is sure to be at the top of the list of presidential candidate concerns.
Despite all the talk and predictions from the self-proclaimed financial experts, the stock markets will always do what it wants to do in regard to the next big move. No matter what they said or written about the future, the stock market always has the final say on the direction it wants to move.
The investment management strategy that you use to make your financial decisions in your Minnesota company 401(k) retirement plan account can’t be grounded in something you just heard or read. The same can be said about any “gut feelings” that you have about how to invest your company retirement plan account assets.
Your company retirement plan investment strategy has to reflect an objective and unemotional reality of how the U.S. economy and the stock markets are moving. That investment strategy has to reflect the here and now.
Every individual company retirement plan participant has at least one story about a severe loss of retirement plan account principal over the last few years. In most cases, the large company retirement plan losses came from the individual investor not paying attention to the realities of the U.S. economic and stock market cycle.
The reality is that the stock market does not know that you are invested in it. More to my point; the stock market does not care that you are invested in it. The stock market will go its own way and you are the one who has to be paying enough attention to follow its lead.
Your company retirement plan account has to be managed to reflect the current risk level of the U.S. economy and stock markets. The investment risk you take has to be managed to reflect the current economic and stock market conditions.
Thinking that the stock market will always “go up” as you get closer to retirement is rarely a successful long-term investment strategy. The better bet is to limit any potential investment losses you take when the U.S. economy and stock markets reflect a slowing down of potential growth.
Ric Lager
Lager & Company, Inc.
