I Can’t Predict the Future

by RC on February 3, 2008

Let me repeat. I CAN’T PREDICT THE FUTURE. 

No one can.  That’s why, in light of the stock market performance over the last few weeks, I’ve done nothing.  I haven’t sold a single share, mutual fund, or ETF.  Why? Because I can’t predict the future!  But, common sense tells me, the stock market will continue to rise. (As it has for the last 100+ years.)  Do I want to miss out on long term gains because I think the market is going to go down a little further in the next couple of months?  Since I have 25-30 years till retirement, No. 

If I had 5 to 10 years till retirement, I think the answer would still be No.

Common sense tells you to buy low and sell high.  What benefit is it to me if I catch the market on the way down, after having sustained losses(selling low), and then don’t catch it on the right time on the way up(end up buying high)? 

None.

  •  If common sense tells me to buy low and sell high, do I want to sell low?
  • Do I want to sell my stock investments at a loss, only to place that money into a savings account earning the rate of inflation (and less than it did a month ago due to the drop in the interest rate)?
  • Do I really want to worry about when to get back in?

The answer is, none of the above. 

 The market has already come up from its low of a couple of weeks ago, approx. 6 % for the Dow Jones.  Is the market going to rise for the rest of the year?  I don’t know. No one does.  But I don’t want to be the person that got out of the market two weeks ago, and will  still be waiting on when to get back in next year.

When it comes to long term investing:

  • Don’t ever think that you are smarter than everyone else.  
  • Use common sense.
  •  Don’t try to predict the future.

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