Anticipating Is A Key To Success

The stock market is behaving strangely just now. The flood of government money has added a dimension not normally part of the stock pricing decision. It is reasonable to assume the government will stop inserting trillions into the economy and the market will be affected.

Bonds too I suppose.

Anticipating

If we anticipate the market will correct down again, what should we do now to be in a position to benefit from that. Maybe nothing is a good answer. Maybe it will go up more. Your choices will depend on a number of factors:

  1. Will I need the money anytime soon?
  2. Am I emotionally troubled when the market falls?
  3. Do I have any alternative way to invest that would be unaffected or perhaps prosper?
  4. Would I care if I prepared a defense and the market went up?
  5. Would I care if I prepared for the market to go up and it fall 20% or more?
  6. Do I know enough about the market pricing issues or do I know someone who does?

A complicated question and one for which there is no right answer.

Some insight from Nick Murray

  1. All financial success comes from acting on a plan. A lot of financial failure comes from reacting to the market
  2. Surprise is the mother of panic
  3. Investing is the age old, never ending emotional battle between fear of the future and faith in the future

Panic is a bad thing usually, but sometimes it is required. If so, ideally, panic first. You can only tell if you must panic by anticipating the variables. So have such a plan.

You will be less emotional if you have anticipated several possible futures. As the future unfolds, some of your anticipating will be shown to be false and you can adjust earlier than others. Do not get tied to the unique possible outcome. Even when the future looks to be an extension of normal, not the case now, people will be surprised by how creative nature can be.

It might be smart to take a look at notes about Nassim Nicholas Taleb’s book, “Antifragile.” It is the study of things that benefit from disorder. I haven’t really thought it through, but I sense, for the West at least, disorder is just now at a near all-time high.

Options

  1. If you anticipate more of the same, you risk panic.
  2. If you anticipate one thing and act as if it is the only thing possible you can be very wrong.
  3. Better to anticipate several possibilities and plan to adjust as the future plays out. You won’t be exactly right, but you should be okay.

Take this thought to heart:

“It is better to be roughly right than precisely wrong.” –  John Maynard Keynes

Anticipating is a key to planning and planning is the key to success.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates. Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

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