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Keep an eye on your investments, analyst says - Successful Farming

Through a world pandemic, collapse in energy markets, and political changes, the stock market has continued to forge higher, providing investors solid returns.

The last several years of positive increases have been impressive. The Dow Jones is trading near 35,000 compared with recent lows of near 18,000, after taking a major hit in the spring of 2020 due to uncertainty with COVID-19.

Since then, the stock market has been on a steady and increasing move higher, with new highs established in all the major indexes. Often, steady bull markets tend to lull investors into inactivity, as it might be argued that doing nothing is the best strategy. Long-term investments are often said to best be left alone as, over time, the market has continued to show that being patient does provide a return on investment.

By many accounts, stock prices are overvalued, running on emotion and perhaps thin air. Our definition of thin air is buying of stocks because there are very few other investment alternatives that provide return.

Certificates of deposit, money markets, and other interest-bearing instruments such as government savings bonds, are offering extremely low payouts and, for many, not worth the investment. The overvalued part may be in the form of expectations of infrastructure spending and previous stimulus packages offered by governments worldwide. These have a tendency to support equities for only so long.

The higher a market goes, the more risk of a setback. That goes without saying. Yet, in the case of the equity markets/investments, bull markets have offered opportunities for investors to grow their wealth. The concept of dollar-cost averaging and benefiting from dividend and interest payments add to longer-term growth. Just being in the market has been “good enough.”

Professional advisers may offer suggestions to move dollars into certain segments, say, technology vs. utility stocks. In general, though, all investments have increased in value.

At some point, however, the equity markets will correct, like most all other markets do over time. Trying to outguess this is difficult and perhaps not attainable. However, being prepared or knowing the market is launching into new highs continuously may have your instinct telling you something different. To keep it simple, if it feels too good to be true, it probably won’t last.

Take time to visit with your financial planner. They can guide you as to where, given your age, risk tolerances, debt levels, and whatever else could affect your investment criteria, you may want to be positioned. Just like marketing your crop, investments need review and new strategies to keep up with the current markets.

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If you have comments, questions, or suggestions, contact Bryan Doherty at Total Farm Marketing. You can reach him at 1-800-334-9779, extension 300.