It must be all the current hype about the Presidential Election on November 6th. You can’t watch TV, read the newspaper, open the mail, or receive a home phone call without another political message trying to get your attention.
When I drove up to my office one morning late last week, I even had an unauthorized political lawn sign in the grass in front of my building. It was in the dumpster before I even opened the front door.
In the just ended presidential debates and on the campaign trail, both presidential candidates focus most of their dialogue on “what I will do in the future.”
All the talk about things will be different in the future has taken individual stock market investor focus off the present. This is an especially dangerous state of mind as more announcements come out every day about lower U.S. company earnings in the future.
The majority of Minnesota investors own stocks through their company retirement plan account. The truth is that these investors don’t look at themselves as active stock market investors. These people realized many years ago that thinking about, watching, and reacting to economic and stock market events is not for them.
The main reason that individual company retirement plan participants stick to a buy-and-hold investment management policy with their stock market investments is that they don’t have the interest, the time, or the confidence in anything else.
Twice in the last ten years, individual company retirement plan participants have lost one-half of the value of their company retirement plan accounts. When you throw in the housing depression, U.S. economic crises, Europe crises and the increased costs of everything from gas to college, it is no wonder that most people think that the best investment strategy now is to buy-and-hope that things will improve after November 6th.
The stock market does not know, or care, if you own it. It also does not care who the president is now or next January. The stock market is going to react to economic and political events its own way.
Every stock market investor has the burden to make the necessary adjustments as to how much risk they want to take with their money now and going forward.
Get out your most recent September 30, 2012 quarterly retirement plan account statement. Make very sure that you know what kind of mutual funds you are invested in now.
You don’t want to be 100% invested in the stock market when company earnings are doing down. You also don’t want to be invested in bonds when interest rates begin to rise. Both of these investment conditions have already begun.
Regardless of the outcome of the upcoming election, the U.S. stock market is at a crossroads right now. Be ready to respond in your company retirement plan account to each event. The best investment management decisions you make for your long-term investment future will be the ones you make in the present.
Ric Lager
Lager & Company, Inc.
