With everyone now reporting about how the next major level of the Dow Index is near, I just read a headline that the NEXT target is well beyond the one we may soon pass. It’s as if the selloff in the beginning of this year didn’t even happen (our post from January). Can we all just agree on something really important? There isn’t a target. When it comes to investing well over a lifetime, to provide for a family’s needs and possibly for generations after them, there isn’t any secret ‘level’ or ‘target’ to reach where we are then finished.
I’m guilty of following the markets’ levels and wondering where it should really be (it’s true ‘value’, so to speak). I’m an advisor, and always want to be in tune with what clients are feeling from being exposed to the 24/7 barrage of market news. But the only value that matters today is where prices are set right now, and what they have the potential to provide over a lifetime. Since we can’t know what events will occur in the future, we also can’t know how the world will collectively respond to those events ahead of time. Will each trader that day—out of the millions—decide to buy or sell, pushing prices up or down? We just can’t know the answer to that question ahead of time.
So when the news is telling you “the market is too high,” or “the market is too low (which rarely is reported), or when the next “target” should or will be, let’s try and remember that our own personal goals are much more relevant than the current level of a limited index of 30 or 500 companies. And patience (along with a comprehensive financial plan and well-coordinated investing strategy) is what provides investors with true value (and yes, returns) over their lifetime.
Pete Dixon, CFP®
Partner and Advisor