Is it just me, or does it seem that lately there are an abundance of investment professionals that have suddenly been gifted with a crystal ball? Why do I say that? Because every time I turn around there seems to be another “expert” predicting where the economy will be two, four, ten years from now, where the stock or bond market will be or where the price of gold, other precious metals, wheat or oil will be in the future. How can so many so called “experts” have such a diverse set of predictions? The answer is simple-being quoted with a prediction is good for business. So please…take these predictions with a heavy dose of salt.
Before I go much further, let me distinguish between those seeking press for the sake of boosting their business vs. the investment professionals that are truly adding value and knowledge to the community of interested and financially intelligent investors.
Take Vanguard for example, the mutual fund leader in no-load index funds that consistently stays away from predicting the future and on their home page, provides investors the straight scoop along with valuable and useful information on investing, whether it be a podcast, investment article or webinar. Charles Schwab is in the same league with very valuable investing knowledge and for those willing to navigate through their site, it’s well worth the investment.
As a fee-only financial planner as well as a retirement planner, I suggest we move back to a “reality based” discussion of the future. Many of us have opinions as well as educated guesses of where the Dow and Nasdaq will be at the end of 2010 as well as 2012, but let’s categorize them as opinions and educated guesses, not the truth.
I bring this up because in the past few weeks, I have had clients call me up saying they watched, read or heard so and so expert say x, y and z and therefore they want to put all their long term investments into cash, even though it’s paying 0.50 percent if you’re lucky.
As most of you reading this post already know, making huge financial life decisions based on what you heard, or better put, your emotional reaction to the latest economic or investment prediction is the opposite of being a smart long-term and diversified investor. But then again, being able to have an honest and respectful discussion with my dear clients before they make a potentially risky move is what I get paid the big bucks for.
Self Directed IRA
As a heads up to those of you wondering about the do’s and don’ts of establishing a self-directed IRA, please feel free to call or email for a complimentary 20 minute consultation. That’s been the topic du jour for the past few weeks and I have some definite opinions about this investment strategy.