By jeff Powell....
Are you an ostrich? We keep hearing how bad the economy is and that the best thing for any potential investor to do is to stick their head in the sand (or money in their mattress) for a while and hope that, when they come back out, everything will be better. But here’s the thing: That approach almost never works out.
One phrase I hear championed by the ostriches is, “I wish we were back in the good old days.” What good old days are they thinking of? I equate the “good old days” view of the world to my golf game. I only remember the two or three great shots I hit and tend to forget the other 80 or so that were less than stellar. That’s just human nature.
So are our best days really behind us? Has the American economy actually started to wither and die? I think not! In fact, I believe this slowdown has created an excellent opportunity to get into the market while the economy is taking a breather. Do you buy a TV or an automobile or, for that matter, anything when it is at its peak price, or do you wait for a sale? Why would stocks and bonds be any different?
If you would have been in the S&P 500 from June 15, 2009 until June 15, 2011, you would have had a 37% return. No, that’s not a typo. There is a saying about investing: “When you see the bandwagon, it’s too late.” The same could go for ostriches. This is when smart investors get their head out of the sand and become opportunists.
You have to remember that the economy is still projected to grow — just at a slower rate than originally expected. Are you going to pass on an opportunity to grow your investments because, well, things could be better? Waiting for ideal conditions before returning to the market could become a very costly strategy. This is really the time to gather up your statements and sit down with a financial advisor to create an investment plan.
Put another way: If you ever want your investments to soar, you’re going to have to leave your ostrich friends behind. Because, say what you want about ostriches, there’s one thing they don’t ever do. Take off.
Jeff Powell is a Certified Financial Planner and the owner of Reliance Wealth Management. He can be contacted at (786) 371-3222 or firstname.lastname@example.org.
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