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Wall Street Steward Blog

The Doomsday Dozen

I do a lot of reading about the financial business, as that is part of my job. What I inevitably find is that there are smarter people than me predicting a major stock market RUN, and smarter people than me predicting a CRASH of epic proportions.

It sure is popular to be a doomsdayer these days. However, where were these guys in 2000? 2008? I was in the business back then…I did not read about it in some book, and there weren’t any people shouting from the mountaintop that we were headed for a crash. Oh, you can find some now that claim that they called these corrections, but I am telling you that back then, they were nowhere to be found. Even if there was an ICON (like Buffett) who had called for a crash during the internet boom, they would have been laughed at and mocked. That was the “new economy, the internet, it is different this time.” Clearly, it wasn’t different, but I am honest enough to admit that I need to use hindsight to see that.

Read some of the bio’s of the current doomsdayers and it feels like memorizing a new alphabet. MS. MBA. PhD. CEO. CFP. CFA. Schools like Harvard, Duke, Stanford, Wharton, etc. Blah, blah, blah…

These are brilliant people. But, WHO should you believe? Who will be correct? The good guys or the bad guys?

Nobody knows. Period. The end. But more so than that, your investment decisions should never be made based on what some expert says. Have a professional create a portfolio designed for YOUR specific risk tolerance and goals, and then ignore all of the outside noise. If you do that, your chances of success are much higher than trying to read the tea leaves of which side of the bed Nouriel Roubini woke up on this morning…

Also, and this will be tough for some of you to hear,but the direction of the stock market over the short term does not matter. If you are saving for a retirement that is still 7-10 years away, and then wish for your money to last throughout your lifetime, it is likely that your time horizon is 30+ years. The longer your time frame, the more irrelevant the short term moves in the stock market are.

If I had one question to ask these Doomsdayers, it would be this:

How many market corrections in HISTORY have we NOT recovered from?

“Excuse me sir, did you mutter something under your breath? I didn’t hear it. Could you say it louder for the judge and jury to hear?”

“NONE.”

“No further questions your honor.”