It really never ceases to amaze me how the tidal wave of consumer confidence has such a fickle memory. Four years ago political pundits, news outlets across the country, and “noted experts” cried that the sky was falling and the stock market would never recover. I remember even reading articles in media sources that I frequent reading that said the lost decade (2001-2011) would prove that the stock market had been forever changed and would never generate the long-term returns that it had for the last 100 years. One article, and I won’t name names to spare the media source embarrassment *cough*CNN* cough* was stating that we entered a reality where bonds might outperform equities in long term investing.
Here we are now, four years later, and every single one of these very same idiots are yelling and screaming, with the same fervor and passion, to buy buy and buy equities. My two cents: It is always a great time to buy equities when it comes to long term (5 plus years) investing. I do get a little cautious when yahoo finance, CNN Money AND Fox Business are all telling me at the same time that now is the time to buy. Collectively these voices from the extreme left and right speaking in unison are a dead giveaway of what “the herd” is doing. Although I find him to be a closet socialist, I like Warren Buffet’s words when it comes to the herd: “Be greedy when others are fearful, and fearful when others are greedy.”
For regular investing our household game plan has not changed. We have been maxing out our employer’s match with our 401Ks and regularly set aside monthly disposable income to our taxable brokerage account. But we have temporarily put our Roth IRA contributions on hold as we build our war chest for a 100% home purchase over the next 2 years. For those with good memories, at the start of the New Year I had $5,000 in excess cash ready to invest when the fiscal cliff hit the market. Obviously that did not happen and I have wound that $5K down to $2,500 since January, arbitrarily buying mutual funds when I saw a “significant” single day drops in the market.
Admittedly I have ridden the bull wave that is Q1 2013. But because I have been regularly investing over the years, the $2.5K in excess I have put in since January hasn’t been the only skin I’ve had in this rise. As a result of having NEVER sold a single mutual fund since 2008, our Roth IRAs, 401Ks and brokerage accounts have been a part of this recent rise with the steady and regular investments we have made over the last 4 years. Ball parking it, that’s over $100,000 worth of investments that have benefitted from this recent bull lift, simply because we buy and hold solid long term investments.
So what am I trying to say? Don’t buy into the hype. Let Jim Cramer scream his little bald head off. Let CNN praise the Great Socialist for fixing the economy and let Fox News think this market rise is because of sequester cuts. Let them all scream and shout their agendas and headlines. I for one am keeping my long term views and strategies and am not paying attention to one damn word of it, and neither should you. Invest with long term horizons in quality mutual funds and let the others scream and shout.