David Fabian | Dec 03, 2015 06:58AM ET
One of my favorite television shows right now is The Blacklist on NBC. The main character in this spy thriller, Raymond Reddington, is prone to deliver thought-provoking monologues that have many applications outside of the fictional drama. One of the more recent episodes focused on the concept of trying to predict or count on a specific outcome in the future.
You see, if you were a betting man, you would understand that now trumps later every time.
The future is a sucker’s bet– a maybe, a contingency, a “What if?”
The only thing that is real is the present. -Raymond Reddington, The Blacklist, NBC
These lines immediately came to mind when I started reading the 2016 market predictions from some of the major banks. Goldman Sachs is forecasting that the market will finish next year near the flat line, while Bank of America is striking a slightly more optimistic tone with a conservative 4-5% gain.
These banks employ legions of bright minds with incalculable modeling power to come out with these forecasts. Yet at the end of the day, I would venture to guess there is probably a small clan of stodgy economists and market watchers who put together these “firm views”. It may ultimately be more of a gut feeling rather than a true analysis of the exponential variables involved.
I think it’s important to remember that the stock market doesn’t care what your price target is.
Particularly in a year that is going to see the first real impact of fiscal tightening in nearly a decade. Don’t forget that we are also going to be electing a new president next year as well. Those are just the major events we KNOW are coming. Add in the countless rounds of corporate earnings, economic data releases, government policy, social trends, and other unforeseeable events and the picture becomes quite murky. These components are what make up the “wall of worry” that stocks are so famous for scaling.
I don’t have a precise view on where we are going to finish 2016. I’m more focused on the process it will take to successfully navigate my clients’ portfolios to that end zone. That means focusing on the present and the facts or variables we have in front of us right now rather than the best guesses of Wall Street’s elite. Price is the ultimate arbiter of reality.
I will certainly have some favored vehicles that I plan on entering the year with and will share those in an upcoming post. However, like all good plans, it may require some modest adjustments as conditions change along the way. There are going to be areas of the portfolio that will need to be trimmed or bolstered in order to keep the ship steady in continuously swirling seas.
Even buy-and-hold investors will be forced to do some soul searching on what to do with dividends , when to re-balance, or what adjustments may be needed to their overall asset allocation. Focusing on the things that are in your control will create a stable platform to build and compound your wealth no matter what the stock market does from year to year.
If you feel like you have been coasting by to this point or aren’t as adequately prepared with an investment plan as you should be, start by following some of these concepts:
The Bottom Line
Creating a plan of attack for 2016 doesn’t have to be overly complicated. The only certainty is that a successful outcome will require time, tools, and discipline. Those who spend time on adequate preparation will be well equipped to meet nearly anything the market throws our way.
Disclosure : FMD Capital Management, its executives, and/or its clients may hold positions in the ETFs, mutual funds or any investment asset mentioned in this article. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities.
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