I think I’ve seen just about everything in the investment world in my 17 years as a financial professional.
Every year, we hear “experts” claim there is a new paradigm and now is the time to change our thinking. Although these new ideas have changed dramatically over time, the results have been the same — disappointing.
Let’s take a quick review of history from just the last 15 years.
Does anyone remember 1997? The popular craze was to buy growth stocks and Internet companies. Value investing didn’t make sense anymore.
In 2001, everyone fell back in love with value companies.
A few years later, it was real estate.
Do you see the trend?
It’s human nature to chase the next great story.
Many people are looking for the easy button, thinking there could be another fund manager out there that can beat the market with some new technical derivatives.
I had someone the other day suggest we buy Iraqi dollars.
Here’s a better thought: let’s remember what industry giants like John Templeton and Warren Buffet taught us all so well — stick with a sound strategy.
What’s wrong with following a basic asset allocation strategy, mixing in some dollar cost averaging, and showing a little patience when the market has a tough slide?
Has anyone seen an analysis that shows this strategy has completely failed?
Tell me again, how have those aforementioned trends faired for most people?
Maybe it’s time to forget the gimmicks and get a little boring.
Sometimes the safety that comes with boring is actually quite sexy. And it may just be better for your pocketbook.
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Asset allocation strategies and continuous or periodic investment plans neither assure a profit nor protect against loss in declining markets. Because dollar cost averaging involves continuous investing regardless of fluctuating price levels, you should carefully consider your financial ability to continue investing through periods of fluctuating prices.
Matthew J. Dobbie is a general agent for the Massachusetts Mutual Life Insurance Company (MassMutual) and managing partner at uFinancial in Camp Hill, Pa. He is a registered principal of and offers securities, investment advisory and financial planning services through MML Investors Services LLC, Member SIPC, (717) 763-7365. California Insurance License #OF93692.