Dancing the Two-Step

I learned the Texas two-step when I traveled halfway across the country to attend Texas A&M University in 1980. Lots of great memories and only a few regrets.

Today, let’s talk about the Wall Street two-step, as in two steps forward, one step back.

For most investors, the two steps forward are easy to grasp. For some, the one step back is a struggle.

When the stock market takes one step back (otherwise known as a bear market), Wall Street pundits will say, “This time it’s different,” and they are right. Every bear market is different. If all bear markets were the same, caused by the same economic, political, and world-wide events, there wouldn’t be any bear markets, because investors would price these known future events into the market, and capture returns similar to Treasury bonds. That is not the way markets work. Embracing unknown stock market risk in the short run allows for the possibility of increased returns over the long run.

Since my first book was published in 1998, the S&P 500 Index has embraced at least 4 bear markets. For Coffeehouse Investors, turning away from pundits and focusing on our principles to get us through the next two decades is what matters most.   

Are you confident your investment and financial plan can endure whatever the market brings? Let's work together and build your confidence in a strategy session with me.