2016 So Far By Brad Thomason, CPA
With Memorial Day now in the rearview, children clamoring to go swimming, and the annual rite of sell-in-May-and-go-away upon us, we pause to take a look at the investing year so far.
Interest rates are lower than they were, despite a Fed rate hike. The stock market is more or less where it started the year, albeit after a mildly queasy (if not sickening) trip to lower territory in between.
I mention these two, not because they are our focus on this forum. But they do remain the focus of most other investors, and likely will until such investors have a reason to look elsewhere.
You know, reasons like falling interest rates and flat stock performance…
The latest issue of Fortune puts it like this:
“If you’re feeling less than confident about where to invest your money, welcome to the increasingly crowded club.”
After blaming the Fed for keeping rates low (i.e. not being enthusiastic about more rate hikes in the near-term), and lamenting the rise in oil and gold (which, you know, some people invest in…) they spend the remainder of the issue talking about stock stuff.
People are making money in real estate. People are making money in recovering exchange-based assets like oil and gold. Wheat prices are through the floor, and will make someone a pretty penny when they spin around. People are making money in all sorts of alternative assets.
It’s just that nobody’s making a whole lot in conventional interest-bearing instruments or US stocks.
Here’s a radical idea: maybe instead of trying to make money in things that aren’t making money, folks should spend a minute looking at things which are.
There’s nothing inherently wrong with stocks or bonds. I’ve said that dozens of times. But every asset cycles through its price range. Some points in the range are better than others. If making money in the form of investment returns is a goal, investing in the markets as they are is better than investing in them as you would like them to be. And if how they are, at the present, is less favorable than some other asset, switch your focus. Or for that matter, do nothing; wait for better data.
But don’t let yourself be fooled into thinking that there are only two investment alternatives out there to choose from. Because that is simply not the case. If you belong to that club that lacks confidence about what to do next, it may be because you are making this harder than it has to be by arbitrarily limiting yourself to a small number of the choices which are actually available to you.
Which if you think about it, is a pretty easy thing to correct.