I was putting my 3-year-old to bed last night, and of course he did not want to go to sleep but it was his bedtime. 3-year-old children often do not know what they need and sometimes they cannot express what they want. Sometimes everything in life is great for them and they are happy and in an instant, they have temper tantrums and become unhappy. I realize it is my job as a parent to guide my child and keep him safe. Sometimes he does not like it, but it is for his own good and development for me to parent him and teach him right from wrong. I find that the stock market can be like a 3-year-old child.
The stock market has a mind of its own, just like a 3-year-old child. Often, the market will not do what you would like it to do. Often, the market goes up for no reason and goes down for no reason. Trying to figure out the market is like trying to dive into the brain of a 3-year-old. You cannot discipline the market or convince the market to go up or down. It will do what it wants on any given day for no reason. As investors, it is important to always have a strategy that is disciplined and defined. This will lead to success over time and it will eliminate many potential mistakes.
Mistakes happen often with investing, but there are ways to eliminate most of them. Flying by the seat of your pants is not an investment strategy. Listening to main-stream media or CNBC is not an investment strategy. Getting stock tips from your neighbor or friend is not an investment strategy. Investment strategies can take time to develop. Learning from our mistakes and not repeating them is a great way to start. We all hope our children do the same. One thing we all need to understand is that the market is going to do whatever it wants. It is up to us as investors to take what the market gives us and make educated decisions based on what may or may not happen. I think most investors are bearish right now and believe a major pull back is coming. If that is how you feel, then raising some cash is prudent. Just realize the market could move another 10 percent higher or more before that happens. Raising cash after the pullback makes little to no sense.
Educating our clients and developing an investment strategy specifically tailored to each of our clients is our focus at Chapman Capital Advisors. This does not happen overnight. It takes time to really get to know a client and how they react or feel during times of market volatility. Before hiring any Financial Advisor, do your due diligence. If there are any formal complaints against an advisor or settlements, they are fully disclosed on the FINRA.ORG website or the SEC.GOV website if the advisor is fee only.