Why is the stock market going up and up?
Janet Yellen, the Chair of the Federal Reserve Board, very eloquently stated,
“I think market participants likely are anticipating shifts in fiscal policy that will stimulate growth and perhaps raise earnings.”
That description is what Wall Street refers to as the Trump rally.
Wall Street looks forward and there is an expectation that President Trump will initiate a host of pro-business policies, including a loosening of bank regulations, increasing fiscal spending, and cutting individual and corporate taxes.
So, should you move more money into the stock market?
The answer is No.
We should not make changes to our investment strategy based on changes in the market, either up or down. Changes should only be made when there are changes in our individual circumstances, meaning time horizon and other factors.
The keys to successful investing are time, diversification and rebalancing. Moving money into a rising stock market is not one of the keys.
I find people are much more adverse to stock market declines. So when, not if, this market turns around and heads the other way, you do not want more money in it than your risk level can tolerate.
If you have any questions about how your money is invested please reach out and we can review.
Lessons Learned From My Dad
Early this year I shared the following from my Dad but since the lesson is timely, I thought I would share it again.
I learned about money and investments from my Dad.
One of his tips was how to manage money. For years, Dad ‘played’ the stock market, buying and selling based on news and stock market ups and downs. He did fine but then he stopped. When he stopped buying and selling, his portfolio was diversified into 60% stocks and 40% bonds.
It did not take him long to realize that his portfolio returns were much better.
His advice: do not chase market ups and downs. Diversify your money, rebalance as necessary and otherwise leave it alone.
I have never forgotten his advice and live it every day. I am glad I can share it with you.
Thank you Dad.