There is a Bull-Bear battle underway that is more complex than ever. Recently we’ve seen a rally in the markets that seems to defy the underlying indicators, so let’s take a quick look at this.
Financial plans are designed for the long term and focus on discipline and diversification. As you’ll see, this is more important now than it’s ever been. There are four broad forces that are creating unpredictable and volatile markets and are creating a head-to-head battle between Bull Market behaviors and Bear Market behaviors.
The first are the machinations of the market itself. Even in “good times,” or more accurately, stable times, the market is unpredictable. There’s a reason that stock charts wiggle up and down: they fluctuate regularly.
The second is that we’re in the midst of a global pandemic. Unemployment is at the highest it’s been in decades, companies are seeking bankruptcy protection, the Federal Reserve is bringing unprecedented stimulus, the growth curve of the pandemic is fluctuating, vaccine research is underway, some companies are booming because of niche demands – it simply hasn’t been seen before and is having incredible influence on markets.
The third is that the nation is gripped with social unrest that is having people question the quality of social decisions and challenge traditional authority. Areas of some major cities are closed and there is a question of how governments will respond to these pressures.
The fourth is our fast-approaching Presidential Election. On top of all the “unheard of” forces at play, the upcoming election has activated the full might of our political machines and is pumping the nation full of messages, dichotomies, hope, fear, uncertainty and rhetoric.
With this backdrop, investors are trying to decide what to do; you may be trying to decide what to do. Should you bet against the Fed? Should you make decisions based on economic fundamentals. Should you ride the optimism of a variable pandemic growth curve? Should you protect yourself from a potential second-wave of virus transmission?
Here’s what you should do:
- Don’t make emotional decisions, they tend to impair long term plans
- Be disciplined and stick to the plan
- Be diversified, it will help you stay on track
Those may not be the exciting strategies you’ve been hoping for, but they are the ones that support long term success and that stay focused on the vision that matters; yours.