As markets make new highs many traders and investors have been left behind. Some are now considering climbing aboard. Fair enough, markets making new highs usually move even higher. Some worry that they have missed a false rally. Mrs. OldProf is encouraging me to keep it brief for a change, so you can just read the statement below if you want. Those who want some reasoning need to go through the rest. I have summarized the most important current issues as briefly as possible.

This is a good time to invest, and an exceptional one if you choose your holdings wisely.

What not to do

• Do not worry about what stocks will do over the next ten or twelve years. You can and should revise your asset allocations regularly.
• Do not obsess about the latest list of alleged “headwinds.” There is always such a list.
• Do not fall for the pseudo experts on the Fed. Explaining markets by Fed actions alone is simplistic and inaccurate.
• Do not worry about someone saying the stock market is “not cheap”. None of these methods work in real time and the inventors don’t even follow them.
• Do not pile onto the crowded trades that worked last year. We are at a point of extreme distortion of sector valuations.
• Do not let your political opinions undermine your investment success.

Ignore Economic Commentary

Most investors cannot distinguish the good from the bad, so it is better to ignore it! Here is why it is mostly biased and inaccurate.

• Popular sources have media business models based on selling fear.

  • The biggest investment blog makes millions for the owners. Their readers have made even less than the “zero” quoted in their name!
  • Many prolific writers earn subscriptions, conference fees, and book deals with repetitive crash predictions. You know who they are, and probably read them regularly.
• Many widely-quoted experts are simply pro-bonds, anti-stocks. If someone sells only bonds or runs a research operation for the bond community, you know what to expect.

• Many noisy commentators are selling high-commission products based upon fear.

  • Read the fine print on “structured products.”
  • Do not get dazzled by the multi-page annuity proposal. The one where you are supposed to initial each page. Email me first for a second opinion.
  • Beware of gold purchases with big commissions and little liquidity. If you want gold, make sure it is a reasonable part of your asset allocation.
• Election season emphasizes negative sound bites. Candidate competition, and especially parties out of power, want to paint the worst case. This is not a partisan political point; it happens whichever party is in power.