Yes, the Market is Volatile and Unpredictable Until You Become a Long Term Investor!

February 6, 2018

I have been living with the market for a long time – not my life span, but long enough to experience fun, exciting, and frightening times. Market volatility is inevitable.  You get used to it in time…all successful investors do.

People have worried that “the market is so high…it has to go down…right?”  If anything, my view is that people began to worry the market was likely to go down and then that thinking became a “self-fulfilling prophecy”.

Variables in the markets are many…much of it good news. Rising corporate earnings, a tax bill providing savings for most individuals, low inflation, an improving job market, lower unemployment – to name a few.  Why should higher interest rates scare people when they are simply getting back to what has been “normal” (6 to 8 % over history) and when low interest rates caused wild and harmful real estate ventures to appear during the early years of the 21st century?

Who was selling?  Possibilities are computers which blindly follow a program that will be adjusted according to how successful its moves prove to be, scared investors, investors who believe they can time the market, and individuals. 

But, historically, it has always been inevitable – the market always comes back and people regret selling.  The downturn was just an opportunity after all.

Louise Googins, Googins Advisors