March 14


Is this the Top of the Market?

Family Update

The house is pretty busy right now. This is the time in a parent’s life when you feel more like a taxi driver. But all of this activity is a lot of fun.

I’ve had dozens of clients say to me, “It goes by so fast, enjoy it.” So I’m doing whatever I can to soak in the moments.

The puppy is like having an infant again. His bladder is so small that he needs to go out every thirty minutes or so. He whines at night like a baby when he needs to go out. What did we get ourselves into?

The kittens are much easier. They rule the upstairs, and the dog owns the first floor. They will meet soon enough. That should be interesting.


Bob Mahomes, recently retired, had a lot more time on his hands. He spent some of this extra time trying to better educate himself about his finances.


The market has not done well recently, Bob thought to himself. This is stressful.


He purchased a book called: IRAs, 401(k)s & Other Retirement Plans: Strategies for Taking Your Money Out.


After trying a couple of days, Bob got frustrated. This is like another language, he thought.  It’s 500 pages long! This is totally overwhelming.


So he decided to try another book: Retirement Planning Guidebook: Navigating the Important Decisions for Retirement Success (The Retirement Researcher’s Guide).


Bob got even more frustrated. The more I try to understand this stuff the more confused I become, he lamented. This seems so complicated. There are hundreds of books on Amazon that talk about the same thing. How I am supposed to know what to do?


This is ridiculous, he thought. My parents had corporate pensions. They had no need to put a single dollar into stocks. I never saw them stress about their retirement finances. Their monthly cash flow was guaranteed.  


Why in the world do I need to rely on these volatile investments for my long-term security? He cried out to the heavens.


A couple of weeks later he was chatting with his brother, Carl. Carl said, “Bob, I purchased a stock-picking system online. It shows you exactly when to buy and sell particular stocks. I made 14% last year. I only have to spend an hour a day or so studying various companies.”


But the entire stock market went up last year, thought Bob. I read that the S&P 500 was up 26%. I don’t want to spend an hour a day looking at charts. 


Next, the economy began to falter and his investment portfolio went down over 10%.


That’s it, thought Bob, I’m done with this. I cannot lose this much money. This is all I have to rely on for the rest of my life. Carl lost 30% of his money. I guess those fancy stock-picking systems aren’t as accurate as he thought.


So Bob put his money into a money market paying 0.1%. He thought, I know I need to make more money with my money. I’ll just wait until the market stops going down and invest the money then.


The market continued its downward trajectory. Bob felt very smart. My wife is going to be so impressed that I took our money out before the market dropped more, thought Bob.  I would have lost another 5%.


Bob watched the market continue to go down. He thought, the market is really down. Maybe I should reinvest my money. But with so much uncertainty in the world, the markets will probably go lower. I’ll hold off a little more.  


The stock market began showing some small upward gains. Bob thought, this downward turn isn’t over. I’ll wait a little longer.


The market continued to grow slowly. Bob thought, from what I hear on the news, this is only a temporary increase. I’ll put my money back into my portfolio once these investments have hit rock bottom.


The market really started to heat up again. There is no way the stock market is going to keep going up, Bob thought. I’m going to wait a little more. I don’t want to buy at the top of the market anyways. 


Pretty soon the markets had recovered their losses. If Bob had stuck to his plan and kept the money invested, he would have regained his 10% loss and then some.


Bob thought, the markets are at all-time highs. There is no way I’m investing right now.


Geez Louise, Bob thought. It was so easy to pull my money out of my portfolio but choosing a time to reinvest seems almost impossible.


He watched incredulously as the stock market continued its upward trend. The world is an absolute mess filled with pandemics and war and domestic unrest. How is the stock market going up? Bob thought.


I’ve missed out on thousands and thousands of dollars in gains. Why am I even messing with this stuff? I don’t even know what I’m doing. 




I cannot emphasize this enough: It is very easy to take your money out of the stock market, but it is almost impossible to determine the best time to reinvest.


I watch people, with their money on the sidelines, wait and wait, losing all kinds of gains in the meantime.


One strategy I would recommend for this situation is referred to as “dollar-cost averaging.”


This simply means you set up a schedule to invest money slowly over time.


For example:


Let’s say Bob’s portfolio was worth $600,000. Instead of timing the markets, a good strategy is to invest $100,000 a month for six months. This way sometimes you are sometimes buying high and sometimes buying low. It is a great strategy to get back into the markets.


Be Blessed,




P.S.- There is significant volatility in the markets right now. I want every one of you to read the following statement out loud (your spouse may look at you funny).


“It doesn’t matter how the stock market is performing. The world is fundamentally uncertain, but companies and economies continue to grow. Innovation continues. Between now and the end of my life, if the stock market doesn’t return an average of 10% per year, it would be absolutely unprecedented. In the future, this time period will look like a small blip on a chart.”

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