2012 Into 2013 Bull Market


Wow, it’s amazing how much stocks have gone up over the past few months!!

I seriously thought we’d have a pullback in August 2012, especially when my portfolio reached an all-time high at the start of the month, and I had no idea the market would climb an additional 25%. Well, now that the Dow has passed 14000, a lot of the experts at Market Watch, The Street, etc. seem to be getting nervous. As crazy as it sounds, I also think milestone numbers have the ability to psychologically trigger inflection points.

Overall, I still think it’s unbelievable difficult (well, mostly impossible) to predict what will happen in the market in the short-term, and while it’s easy to run around raving about how everything is so GREAT right now, tomorrow could be a completely different story. The thing that upsets me a little bit is how the media hides the bad economic news, especially the international news, when everything is going well domestically. For example, who would have known that Spain’s economy plunged in its fourth quarter, or that the government in The Netherlands is providing bailout money to some of their banks to prevent their economy from crashing right now. Well, if the market falls in the US and there isn’t enough domestic news to blame it on, I can guarantee you’ll see a bunch of these headlines emerging.

I guess the moral of the story is to “proceed with caution”. I, too, have a tendency to get caught up in the excitement, raving about the gains and all of the exciting winners. But who wouldn’t when the market hasn’t rallied like this since 1994? I also found out that 10 out of the 11 times the market has rallied so much like this, the stock market has continued to climb for the rest of the year. Based on this, one might assume the odds are in their favor… but… are they really?

I think we can all agree that the best place to invest hard earned money in 2013 is in stocks and/or real estate. For investing in stocks, I’m always a huge fan of long-term, low volatility stocks with safe, reliable dividends. Of course they’re boring and won’t be able to provide the same excitement you’d get out of the hot technology stocks like Facebook (FB), Apple (AAPL) or Netflix (NFLX) that everyone’s talking about, but in 20 years, you’ll definitely be ahead of your peers. The best part is that if you’re investing in the “boring” funds, you don’t need to worry so much when the market drops since you’ll know your stock picks are legitimate and safe. It’s still important to reconfirm your positions from time to time, but unlike Jim Cramer and other personal finance educators who claim there’s a need to consistently do homework and to research the crap out of your investments, I think it’s definitely possible to sit back for literally years if you can select the right blue-chip companies. And if it weren’t for my thoughts on the literal application of this “buy and hold” strategy, I wouldn’t be so interested in advocating the stock market to all of my friends and family.  Over the years, I’ve heard a lot of my colleagues and friends complain that investing in the stock market takes too much time.  Well, I’m here to say that it does NOT!  🙂  Just take a deep breath over a weekend sometime and DO something about it.  Force yourself.

Another excuse I hear from people is that they don’t have enough money, and this seems to be a big one.  Again, I flat out DO NOT agree.  I have to be nice whenever I hear this one though, because it’s always a sensitive topic for people.  But seriously, stop being so lazy!  I think you could have as little as $500 that you absolutely do not need to use in the foreseeable future, put it into the market, more than double it in 5 years, and then buy yourself a $1000 plane ticket for a mini vacation to a remote island somewhere.  But, the whole premise of investing in the stock market while you’re young in the first place is not to buy vacations, or to go on a spending spree somewhere else, but to save your money for your family and for your retirement.

I’d like to talk a little about some of my recommendations for the “boring”, more safe investments, but I’ll save it for another post.  In the meantime, don’t wait for me, go ahead and get started!  🙂

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