Stop! You Do NOT Know When Stocks Will Fall

By James E. Wilson via

The “prediction addiction” is alive and well. Everyone on the planet has an opinion about the stock market direction, but mostly these are manifestations of deeply rooted behavioral biases. All forms of media overflow with stories about investing at “the right time”. Total nonsensical garbage. The “right time” is a myth.

Never mind, investors still clamor for the magic wand that will immunize them from possible market declines, all the while missing the actual increases. Not exactly a winning strategy.

Indeed, financial markets go up and down. Investing necessarily involves risk but this risk pales in comparison to the largest risk for most individuals, what we call “shortfall risk”. The combination of inflation, increasing life expectancies, and undersaving create a very difficult dilemma for many investors. Make no mistake, shortfall risk, the risk associated with declining lifestyle and running out of money, is a very real possibility for many people nearing retirement.

To solution to almost any big problem, the solution often creates a sense of discomfort. The U.S. Navy Seals have a saying : “Get comfortable being uncomfortable.” There is a direct connection between how “uncomfortable “ you are willing to become and solving shortfall risk. Being a “successful” investor means investing in a way that funds your specific objectives. This usually translates into being a permanent stock market investor.

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