The general consensus is the rise in capital markets, despite global weakness, geopolitical risks and sluggish employment and wage growth, is clearly a sign of economic strength as witnessed by rising corporate profitability.
Therefore, stocks are the only investment worth having.
My arguments are much more pragmatic.
First, it is worth noting that while the markets have risen to “all-time highs,” there was a massive amount of “time” lost in growing capital to meet retirement goals.
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This is crucially important to understand as was something I addressed in “Stocks – The Great Wealth Equalizer:”
Time - Individuals - Point - Life - Incomes
“By the time that most individuals achieve a point in life where incomes and savings rates are great enough to invest excess cash flows, they generally do not have 30 years left to reach their goal. This is why losing 5-7 years of time getting back to “even” is not a viable investment strategy.
The chart below is the inflation-return of $1000 invested in 1995 with $100 added monthly. The blue line represents the impact of the investment using simple dollar-cost averaging. The red line represents a “lump sum” approach. The lump-sum approach utilizes a simple weekly moving average crossover as a signal to either dollar cost average into a portfolio OR moves to cash. The impact of NOT DESTROYING investment capital by buying into a declining market is significant.”
Market - Timing - Means - Markets - Game
“Importantly, I am not advocating “market timing” by any means. What I am suggesting is that if you are going to invest into the financial markets, arguably the single most complicated game on the planet, then you need to have some measure to...
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