Learning To Love The Line

Amy Hubble |

Most people are surprised to learn that I do not like roller coasters.  Not at all.  So much, that I’ve been known to bring a book along to a group trip to Frontier City or Six Flags.  Even though my mind knows they’re safe, my stomach often disagrees, so I generally prefer to skip the lines and relax in the sunshine.  

Investing can be like waiting in line for a roller coaster.  The large dips and big thrills make up a relatively small amount of the time you spend at an amusement park.  Most of your time is spent standing in line, and the bigger the ride, the longer the line.  Market returns are the same.  Check out this study:  if you missed the 10 best weeks since 1970 – 0.41% all weeks, you might as well have just invested in short-term government T-bills.   Successful investors have had to be in line most of that time, not doing anything dangerous or stupid, just standing around committed to their goals.

The first quarter of 2017 has started off incredibly calm.  The Dow has registered only one 200+ point swing day this year; compared to Q1 2016, when we had 20.   It seems the things that would have formerly thrown us into a panic, just don’t seem to bother us anymore.  Whether it be Fed speeches, rate hikes, congressional gridlock, international turmoil, Syrian airstrikes, or disappointing employment data…nothing rattles us.   We’ve grabbed a funnel cake, and we’re standing in the short lines for the Ferris wheel.

Where does the market go from here? Nobody knows, but we’re long-term investors, and history is on our side.  Just like an amusement park, we stay all day, take profits when opportunities present themselves, and get back in line.

As a side note, it’s tax time! And there’s still time to open or make contributions to your Roth IRA for 2016 before April 17th.  You can make contributions up to $5,500 that will grow tax-free for retirement.  Contact Radix Financial for help getting started!

Happy Easter!

Amy Hubble, CFA, CFP®