On a recent backpacking trip, as we were going up the mountain, the trail went all over the place. It went 5 steps up and then 3 steps down. It went 20 steps left and then 20 steps right. My teenagers frequently were compelled to question the makers of the trail and why they didn’t make the trail in a straight line, only going uphill. The trail goes where the trail goes. It goes around trees and big boulders. It goes down with the earth and back up with the earth. The earth is not flat. It is not convenient. But if we stay on the trail it does eventually take us where we want to go. We could walk along the parking lot, which is flat and straight, but we wouldn’t get the view at the top of the mountain.
It all depends on what you want. If you want flat/straight, consider keeping your money in Cash. If you want the view at the top of the mountain and can handle the inefficient ups/downs, consider investing in the stock market. There may be 6 months or a year at times of downturns when it seems that you are on the wrong path but historically markets go up more than down. My teenagers asked to see the map at one point, sure that we were not on the correct trail anymore, so we pulled out the mapped and they were patient a little longer.
Most of life is about risk/reward trade-offs. It is important to know your risk tolerance level in relationship to your objectives.
In general: Know your risk tolerance and know your objectives. Focus on the big picture instead of every single day of market ups/downs. Form a plan and stay steady with your plan and look at your “map” to stay focused.
By Cammie Humke, Registered Representative at The Humke Group, Inc
Located at 555 S. Randall Rd #103 in St. Charles, IL 60174, phone 630-584-7343
The Humke Group, Inc is an independent firm. Securities offered through Cetera Advisor Networks LLC, member FINRA/SIPC. Advisory services offered through Summit Financial Group, Inc., a registered investment adviser. Summit and Cetera are affiliated and under separate ownership from any other named entity.
Market Commentary: The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. A diversified portfolio does not assure a profit or protect against loss in a declining market. The return and principal value of stocks fluctuate with changes in market conditions. Shares when sold may be worth more or less than their original cost.