It’s hard to put into words what is happening in the investment landscape because it has never quite happened like this before. In the wake of all-time market highs, many investors feel terrified.
A recent Wall Street Journal article describes the fear very well: “One of the biggest surprises of the U.S. stock market’s relentless rally is how many individual investors have run away from it.
The Dow Jones Industrial Average closed above 25000 for the first time on Thursday, punctuating a record-setting period nearly unmatched in U.S. history. Yet throughout the nearly nine-year surge in share prices, individual investors have continued to yank money out of funds that own U.S. stocks.
Nearly $1 trillion has been pulled from retail-investor mutual funds that target U.S. stocks since the start of 2012, according to EPFR Global, a fund-tracking firm. Over that same period through Wednesday, the S&P 500 soared 116% and, along with the Dow Industrials and Nasdaq Composite Index, rose to 190 all-time highs. (1)”
We are scared. Still. From the financial crisis of our lifetimes that crescendoed in 2008. Oh, and we still remember the bite of the dot-com crash ending in 2001. So many of us feel like this cannot last.
The second part of our dilemma, so different than any time before, is that we don’t understand the real risks we are taking. New tools are available to help us understand what risks we are taking. And better than ever before, we can predict how you may fare if something bad happens again. We can make these powerful tools available to you on the Internet and, for your friends and family, a free survey and free second opinion
An early theme for 2018 is the risk that is real, and the risks that are not. We’ll have one of our popular lunch & learn conversations in the next few weeks for a small number of you to attend. Everyone, however, consider talking to your advisor about our new suite of risk analysis tools and add them to your financial plan. Tell your friends. Let’s get a grip on the risks we actually face, and better equip ourselves for the investment landscape ahead.