Nobody Knows!

Recent news headlines:

Some questions that might be on your mind:

  • Have we hit bottom yet?
  • Where is the bottom?
  • When will we hit bottom?
  • Can things get any worse?
  • How much worse can this get?
  • Where will we be six months from now?
  • How long will it take to recover these losses?

The answer to those questions: NOBODY KNOWS! And if anybody tries to tell you they do know, don’t trust them. Nobody knows with certainty where the bottom is or when it will happen. No one knows how long it will take to get back to the October, 2007 highs.

Here’s what I do know:

  • Previous bear markets have not lasted forever.
  • Twelve year lows are extremely rare. It’s also interesting to note that the 12 year low in 1932 was just three months before the end of the bear market. In 1974, the 12 year low was exactly the low for that bear market.
  • Investor confidence is very low. Periods of extreme pessimism occur near bear market bottoms.

My advice:

  • Avoid making any emotional decisions. Fear is a very powerful emotion. Fear can lead to negative investment behavior. The greatest investors are able to control their emotions.
  • Embrace uncertainty.
  • Have patience.
  • Don’t follow the crowd.
  • Get advice from an expert before making major changes to your investment strategy.

Trackbacks

  1. […] Not knowing at the time that this would be the day the market would decide to bottom, and then surge 68% over the next year, I advised both of my clients to stay put.  I was confident that the market was getting close to a bottom and thought this would be the absolute worse time to sell stocks. […]

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