9 Wise Sayings All Investors Can Learn From
The Dow Jones Industrial Average hit a record high last week – surging above the 21,000 mark for the first time in history. The Dow recorded its fastest-ever 1,000 point increase, in only 24 trading sessions. The stock market rally has been largely attributed to a number of promises and new policies from the Trump Administration. Wall Street analysts are warning that if the new President and Congress fail to deliver, a sharp correction could ensue.
The latest round of gains in the stock market smacks of euphoria and perhaps a little bit of greed. Traditionally, stock market tops form as late-comers to the party – typically the "retail, investing public" rush to buy stocks. As the public hears about the tremendous gains on the news and hears the chatter among their friends, they buy stocks.
In cycle after cycle this occurs. The smart money or institutional buyers enter the market on the way up and the public buys at or near the top, only to get trapped as the cycle turns.
Before you let the current wave of bullish stock market euphoria take over your investing decisions, consider these wise 9 sayings.
- “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die of euphoria.” John Templeton
There is a high level of euphoria and bullish expectation built into stock prices right now.
- An investment in knowledge pays the best interest – Benjamin Franklin
The wise investor takes the time to learn and gather knowledge from multiple sources.
- The stock market is filled with individuals who know the price of everything, but the value of nothing – Phillip Fisher.
Current stock valuations are extremely stretched. There are only two times in history that markets have been more expensive – in 1929 and 1999. (Remember what happened then?)
- How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case – Robert G. Allen.
Cash in savings accounts or even CD accounts earn virtually no interest in today's low-rate world. While it is important to have an emergency savings account in liquid investments or cash, this is not the key to building wealth over the long-term. A properly diversified portfolio that includes tangible assets is key to building wealth.
- "I will tell you how to become rich. Close the doors. Be fearful when others are greedy and greedy when others are fearful." – Warren Buffett
Greed can be just as damaging to your portfolio as fear. Are you rushing to buy stocks right now? Tops often form as the "public" chases new highs at the end of a cycle. Don't get caught up in the greed.
- “If you don’t own gold, you know neither history nor economics.” – Ray Dalio – billionaire investor and founder of Bridgewater Associates, one of the world's largest hedge funds.
History has proven gold's value throughout the ages. The long-term price trend for gold is up. Over the last century, the larger trend of paper or fiat money has been down, while gold has vastly outperformed.
- “The international monetary order is more precarious by far today than it was in 1929. Then, gold was international money, incorruptible, unmanageable, and unchangeable. Today, the U.S. dollar serves as the international medium of exchange, managed by Washington politicians and Federal Reserve officials, manipulated from day to day and serving politician's goals and ambitions. This difference alone sounds the alarm to all perceptive observers.”–Hans F. Sennholz
The U.S. faces a nearly $20 trillion deficit. The Fed's balance sheet is near historic levels in the wake of quantitative easing (money printing) after the 2008 global financial crisis. Paper money continues to be devalued.
- "The possession of gold has ruined fewer men than the lack of it." – Thomas Bailey Aldrich
Tangible assets – whether that is real estate, or physical gold or silver are real assets – something you can drive by and see, or hold in your hand, unlike a paper asset of a stock or bond.
- “Money is gold, and nothing else”— J.P. Morgan
What's in your portfolio now? It is very easy to get started buying physical bullion. Contact Blanchard at 1-800-880-4653.