the right way to invest blog
Here you’ll find the Q2, 2021 Quarterly Report. Q2 saw a strong performance from the stock and bond market, which you can see on page 3. The report wraps up with a synopsis of a conversation about inflation from Dimensional’s founder, David Booth and famed economist, Eugene Fama. I highlighted a favorite investing quote I use often: “Control what you can control.”
When it comes to investing in the stock market, we’ll do better if we can control and manage elements of investing that we can control in the first place. We can control time in the market, cost, the investments we choose, maximizing our tax-advantages, and a very important aspect, our emotions, too. When we understand these elements of investing, we significantly set ourselves up to have a more successful portfolio. Our emotions can get the best of us when we get caught up in the day-to-day movements of the stock market. Yesterday’s huge down day was a perfect example of why not to panic – it was just a tiny speed bump on a very long road. We don’t want to overreact. When we ignore what is out of our control and we understand what we can control and how best to go about it, we’ll reward our preparedness and diligence with a portfolio built for a safe, secure and comfortable retirement. put up with the gold to be rewarded with the green (or is it teal or turquoise?). Stock market investing comes with bull (stocks up) and bear (stocks down) markets, but the bull markets are stronger and last longer. Think of the stock market as a constant bull market that is temporarily interrupted by short-lived bear markets. We don’t know when the next bear market will occur. It’ll happen at some point, fortunately, it won’t last long and it’s only temporary. If your retirement portfolio supports stock exposure, take the little bit of bad with a whole lot of good and stay invested through the good times and the bad times and you will build wealth for a safe, secure, and comfortable retirement. See the below picture or this PDF from Dimensional for more information.
Here you’ll find the Q4, 2020 Market Summary. [page graphics pasted below] Page 3 shows a strong 4th quarter for US stocks, international stocks, emerging stocks, and global real estate. When you compare page 3 to page 4 “Long-Term Market Summary” you’ll see 4th quarter capped off a strong year for stocks led by the US stock market and emerging markets. Global real estate was down over 9%, but it’s still a slice of a diversified portfolio we want to hold. Looking at global real estate’s 5- and 10-year track record supports that claim. With everything negative that happened in 2020, it might come as a shock that markets performed so well. When I wrote my Q1, 2020 Market Summary – only 9 months ago – stocks and global real estate were down for the year anywhere from 21% - 29%. Markets go up and markets go down, but it’s important to remember major stock markets go down for a short time, while they ultimately go up forever. When they do go down, we need to be ready buy good companies on sale, and that’s what we did in March of 2020. Hopefully, we don’t go through another global pandemic, but we do know we will go through another market downturn (it will probably be sharp…but we know it will be temporary). When that happens, we’ll be prepared; we’ll be more relaxed cause we’ve seen it before, we’ll capitalize on it and our resolve will be rewarded once again. We don’t know when it will happen, but when it does, we’ll be ready. PAGE 3 PAGE 4
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connectauthorMichael Pensinger, CFP® is Owner and President of Pensinger Financial, Inc.
He grew up in Park Forest, Illinois and now resides in Lemont, Illinois with his wife, two children, and two dogs. Michael is actively involved in his community; coaching kids' sports, having served as Treasurer for the Lemont Area Chamber of Commerce Board of Directors, sitting on the Board of Directors for Hope & Friendship Foundation, and volunteering for the Lemont Heritage Woodland Sanctuary Open Space Committee. Read More Archives
October 2021
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