Stocks are at all-time highs, interest rates are at all-time lows, unemployment is the lowest it has been in decades, the Fed appears to be in a holding pattern as all seems right with the world.
What could possibly go wrong?
Well, hopefully, nothing will go awry but it is always a good idea to remember that change is a pervasive force throughout history.
As a young stockbroker many decades ago, I remember Bob Farrell, one of the all-time great observers of capital markets, sharing his “Timeless Rules for Investors.”
Rule number 9 states that “when all experts and forecasts agree- something else is going to happen.”
Last year at this time, the majority of pundits were talking about slow growth and low single-digit returns for the S&P 500 and, oh, how wrong they were.
For 2020 many of the so-called “experts” are talking about China becoming the driving force in the global economy as US stocks look expensive.
Do I know what is going to happen in 2020?
Not a chance.
I do know that ignoring the experts and holding a globally diversified portfolio of stocks and bonds is just about the best strategy there is for long term investors.
No one knows where the next storm will hit-literally and figuratively. Who among us expected to wake up on 9-11 glued to our television screens as planes flew into the World Trade Center and the Pentagon? Not to mention, at this time last year I don’t recall anyone predicting returns approaching 30%.
The future is unknowable and the best roadmap for 2020 is the one that has worked in the past.
Diversify, be patient, ignore the media, have a plan and stick to it. Turning off your TV is easy, managing your emotions is difficult.
Happy New Year and Happy New Decade.
Make the most of both and remember that if you have your health, you have everything.