Do you recall how you felt in March 2020? You felt terrible. How do I know? Everyone did. The news was bad, the future uncertain, the death toll rising and current events were spiralling downwards. The market had fallen 35% in 3 weeks. There were no bright spots.
With the news and environment unchanged, the stock market started going up. And it kept going. Why? The participants could see over the chasm of closed and failing businesses to more online shopping?
For every turn in the market, on a daily basis, the talking heads will give you a reason why. It’s always written after the fact. And the lesson I learned first-hand last year was this: there is no reason. Sure, maybe over years of economic growth and stability, the markets go up. But any given day, month or year - no one has any idea what the market will do.
So, what to do? That’s the important part: be ready for anything and take what the market gives you. It goes up? Rebalance back to bonds, be slightly more defensive. It goes down? Rebalance into stocks, be slightly more aggressive. Ignore the news, look at the numbers and take what you’re given.