It’s 2018 – Now What?
It’s 2018. Happy New Year! So where does the market go from here? What market? The stock and bond markets? Foreign and domestic? The real estate market too – up or down?
I’ve read lots of articles recently predicting this and that for 2018. Know what? The predictions are all over the map. That brings me back to the point where I begin every year, is there any reason to change my asset allocation?
A quick check with Mrs. Ludwick indicates our time horizon for retirement hasn’t changed. Our health remains the same and therefore our life expectancy has been not been curtailed. So do we need to change our asset allocation? No. Do we need to re-balance? Yes, just a little. Most of our asset classes did well last year, but stocks grew faster than bonds so we had to sell some stocks (in retirement accounts, of course) and buy some more bonds. Not exactly what we wanted to do since we know bonds and bond fund balances will go down as interest rates start rising, but what can we do? In the long term, we recognize this as the right place to be.
This is a good opportunity to remind our readers about a book, “Your Money and Your Brain” by Jason Zweig, personal finance writer for the Wall Street Journal. His book points out why we as humans are not good investors and how some people and firms have taken advantage of our human nature (think Madoff).
We’d also remind you about a popular blog: behaviorgap.com and Carl Richard’s book: “The Behavior Gap –Simple Ways to Stop Doing Dumb Things with Money”. I also get the Carl Richard’s newsletter and read him in the New York Times. This is another vehicle to be reminded to stay on track and don’t listen to all those predictions. They’re usually wrong. Remember the broken clock analogy: “A broken clock is right twice a day.”
Good luck for 2018. We can use it.