The Prudent Retiree - March 26, 2021
Prudent Retiree has always enjoyed virtuoso rock guitar players. It is especially gratifying to discover one that very few have heard. Such is the case with Monte Montgomery. Twenty or so years ago, I heard a band warming up at the St. Louis Art Fair. I was transfixed by the music. I met Monte Montgomery, the guitar player, and stayed for the show. Monte was a legend from Austin, Texas hoping to expand his reach. I became a member of what is unfortunately only a small group of hardcore fans. Monte really never “made it” out of Austin where he still plays today. I’ve seen him many times over the years and my mind has never given up embracing the idea that he should be a big star.
The market has been sluggish and in a bit of a holding period for the past month. We’ve eeked out new highs and then pulled back. Interest rates have moved up over inflation fears. States and politicians are fighting over how to best fight Covid-19. Reopen or stay closed? Masks or no masks? Neanderthals? Spend massively? Raise taxes? Bitcoin, Special Purpose Acquisition Companies (SPACs) and GameStop are causing new levels of uncertainty. Is the market too high?
Many long to embrace the notion that we are heading for a market crash. They just can’t get a crash out of their minds because of all the bad news we’ve experienced in the past year. Remember that bad news sells newspapers. You only hear about plane crashes, not about the millions that land safely.
I’ll let you in on a secret—someday the market will crash for some reason. No one knows when or why. Many have lost over the years trying to predict the next big one. The prudent course is to listen to the market. The market itself will tell you what to do and when. It can be tough to follow the market when you are caught up in the moment, but the discipline of risk management will keep you on a solid footing.
Market metrics remain positive. The Fed has reaffirmed their commitment to low interest rates and quantitative easing. The economy is gradually reopening. The government is providing significant stimulus. The market is poised to move higher. There will be negative headlines, volatility and periodic corrections. These are part and parcel of investing, but on balance, conditions are favorable for stocks. Maintain current equity allocations and embrace only what the market is telling you. Perhaps, Monte still has a shot.
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Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
Investing involves risk including loss of principal. No strategy assures success or protects against loss.
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