I just realized that other than the three purchases of SPY, I haven’t bought any stocks this year. I haven’t sold anything either.
It probably looks to an outsider that I’ve given up on trading, gotten bored, or am just missing in action.
But please remember that I am not a stock trader (like all of the financial media wants you to be). I don’t go in and out of stock positions based on which direction I think the wind is blowing. This is my hard earned money and I’m trying to invest it, not trade it!
2016 Has Been A Strange And Scary Year
1) We began 2016 with the bottom falling out of the stock market. It was the biggest drop to begin a year ever in recorded history and it really got my attention. Then, it all turned on a dime and the market came roaring back to hit new highs. How could things looks so bad to investors and then suddenly turn around so fast? I’ve never quite understood things like that.
2) Brexit happened mid-year and there was another big drop in the market that was quite frightening while it was happening. Investors HATE uncertainty and that was a very uncertain week. But it lasted a whole 2-3 days and the market immediately snapped back from that too. Who would have thought?
3) And now we have had a 3 month period where the market has stood still and seems like it wants to go down. The big event here is the U.S. election where it appears that no matter which candidate is elected, the whole country will be the loser. You read everywhere that the stock market wants Clinton to win and at this point that seems likely but some crazy things can happen between then and now. Here is the chart of the S&P for 2016 so far:
Throughout 2016, there has been a glut of opinion articles written by a wide variety of “experts” and pundits saying that the stock market will at some point see a VERY BIG pullback. It is generally agreed that stocks are overvalued (price to earnings too high) and it seems most agree that if a giant pullback doesn’t occur this year, then surely it will happen in 2017. I don’t know whether they are right but I do know it can be intimidating to someone thinking about what stocks to buy and what time to buy them.
I’ll Invest My Money When I Feel Like It!
Like I said before, the money I have to invest is real, hard earned, after tax dollars. I’m sure the money you have to invest is the same. That means I want to protect it and grow it if possible. But it may not be possible to grow it each and every month or each and every year. I accept that. I choose to invest cautiously and only buy the stocks I feel comfortable buying, at the time I feel comfortable buying them.
That means I don’t feel I have to be throwing my money at this stock or that stock, desperately trying to make money all the time. Doing things that way would surely be a recipe for losing money. I want to sleep well at night and I do that by only making the investment choices that I feel comfortable with. I shy away from the ever present pressure from the financial media to be an “active” investor.
Sometimes when I’m in an extended quiet period like this I start to doubt myself. Shouldn’t I be buying something? Shouldn’t I be doing something to make my money grow? Is doing nothing really the right thing? But in my experience I have found that whenever I have bought stocks just because I’ve felt the need to be active, it has almost always ended up badly. Its far better to do nothing with my cash than buy stocks just to be buying stocks and maybe end up losing.
So for now, I sit tight, waiting to see what happens with this election and the market as a whole. At least I am collecting some dividends.