With interest rates rising the bond values are dropping and people are shifting into the stock market. Today’s 10-year Treasury yield is up to 2/.3% and the 30 year T-bond yield is 3.568%. Home buyers are scrambling to buy 30-year mortgages, now up to an average rate of about 4.7%. My portfolios are benefiting and the increase in dividend-paying stocks has added value.
The question becomes: will the market continue to grow or will rising interest rates cause the markets to turn down? At some point – three days, three months, or even as far out as three years the market will, once again, have a few unpleasant days. This will scare the logic out of the individual investors similar to markets of 2008.
The markets have evolved during the last few years. You have a situation in which all but 20 percent of trades are done automatically. The specialist system is broken or disappeared. You don’t have the same type of market structure you had when I was doing this a generation ago. Volatility with a big “V” is a fact of life in today’s markets.
You have to be aware of the new realities and go from there, but the original theories of investing still hold true.
I have written a list of simple, common sense rules, Investment Promises to make to yourself, to remember in times when you are becoming unsure of the markets —-You may want to keep this available to review when these swings occur.
- I am a long-term investor and I know the stock market always comes back. I will sleep securely knowing history is on my side.
- When stocks fall dramatically, I will stay cool, calm, and confident.
- When stocks start back up, I will hold or buy even more. Waiting to get back to “even” is bogus, and I will not fall for it. Nor will I take short term gains. I am going for big, long-term winners.
- I will not read, listen to, or believe negative stories during a crash. I know things are never as good as they seem when you’re winning, and never as bad as they seem when you’re losing. The blessed media will probably be uniformly negative if we have a real barn-burner of a crash.
- I will not change my investment objectives while the stock market is down. Nor will I become a “safety first” investor under emotional duress so that I decide to sell stock and go to cash. I will maintain my course of action, knowing when I have one or two bad years my averages will be made up in time.
- I will become more informed and educated on stock history by reading Stocks for the Long Run by Jeremy J. Siegel. It shows the record of stocks back to 1805 and explains why it’s dangerous not to be in stocks.
- I won’t worry that stock prices could go lower. When everyone is scared and the market has just had a big crash, I will buy as much as I can because people who are afraid and procrastinate and who are looking for a bottom tend to miss the bottom and then don’t get back in.
- Time has shown that a big fall has normally been a precursor to a big bull market.
- Finally, every big break generates a new generation of gloom and doomers. I will ignore them.
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Let’s get together, face to face. I will help you experience — and understand — how your money will grow in the world of long-term investments. Let me show you how much fun it can be! Call me, Vicki L Wille, today at 702-878-9562.
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