Admittedly, 2020 was hardly business as usual. Still, no mere pandemic stopped us from producing another year’s worth of thoughtful posts here at Lowrie Financial.
If anything, the extraordinary times provided fresh fodder to fuel our timeless market insights.
This and every year, investors remain best served by forming a personalized investment plan, and sticking with it throughout the market’s often surprisingly swift mood swings.
Let’s take a moment to revisit additional insights we shared throughout 2020.
A year’s worth of worthy advice (January 2020)
“Here are four important reminders on the perils of trying to time the market – at any time. It may offer brief relief, but market-timing ultimately runs counter to your best strategies for building durable, long-term wealth.”
A timeless investment lesson learned from coronavirus (February 2020)
“The latest news on coronavirus is unfolding far too fast for any one investor to react to it, but not nearly fast enough to keep up with highly efficient markets. … So, if you decide to sell your holdings in response to bad news, you’ll do so at a price already discounted to reflect it. In short, you’ll lock in a loss, rather than ride out the storm.”
Rebalancing in down markets: scary, but important (March 2020)
“Rebalancing makes a great deal of sense once you understand how it works. It offers objective guidelines and a clear process to help you remain on course toward your personal goals in rocky markets.”
“It’s hard to remain calm in turbulent times, when everything seems to be happening at once. To help, try embracing simplicity, in your life and your financial plans.”
“Once you’ve allocated your investments to an appropriate mix of stocks/bonds, there are times it may make sense to revisit that mix. Abandoning your carefully crafted asset allocation out of fear or panic is not one of those times.”
Are stock markets ingenious or insane? (May 2020)
“No matter how insane the market, the economy, or the world in general may often seem, perhaps the craziest thing of all is to base your next investment decision on gut feels or fast-moving trends.”
“Just because you CAN invest in ‘a blizzard of options’ does not mean you SHOULD. Fortunately, there are sensible, low-cost solutions available to help you avoid choice overload in your investment portfolio.”
Is value investing still of value? (July 2020)
“As academic research continues to show, we can’t predict when, or even if, the value premium will reawaken. But we do know it can happen in a sudden rush, often when it has hit bottom and a recovery is least expected.”
Should investors ‘go defensive’ in uncertain times? (August 2020)
“There’s never a bad time to build more cash reserves or similar safe harbour holdings if your investment plan calls for it. However, I would not advise reducing your position in stocks and going to cash simply because markets seem too hot to handle. This is just another form of market-timing.”
Three things you and I don’t know about investing (September 2020)
“Ever heard of the Dunning-Kruger Effect? It’s a fancy term for describing how people who are less familiar with a subject tend to be more confident about their understanding of it than someone who is an expert in the same.”
Should I change my investments during an election? (October 2020)
“In the 2020 U.S. presidential race, we’re seeing prime examples of both dire and exuberant financial forecasts, presumably premised on who wins the election. The truth is, nobody has a clue what all the combined market-moving forces have in store for us in the near term.”
The price we pay for investment certainty (November 2020)
“Throughout your financial journey, there may be different ‘price points’ you’re willing to pay to accumulate more wealth while preserving what you’ve already got. Identifying and maintaining the right exchange for you and your personal financial goals is where the art and science of financial planning and investment management come in.”
Investing timeline in retirement (and beyond) (December 2020)
“It’s important to have the income stream you’ll need in retirement, come what may in the stock market. But it’s also important to remember how long you’ll need to keep that stream flowing. For an ample supply, an appropriate mix of inflation-beating stocks and dependable cash reserves remains the most logical and solid approach.”
Speaking of time, it will probably be no time at all before I’m releasing my next annual roll-up. Is your investment plan already in place, ready to adhere to throughout 2021? Or could your plans use some shoring up after last year’s trials and tribulations? Either way, we’re here to help, all year round.