By Lee Munson
There is a feeling out there by some in the financial media that small-time investors are getting back into the stock market at the worst possible time. They -- or 'them' -- think this is entirely predictable and repeatable mistake.
I get it: "them" are smart and 'you people' only make mistakes.
Let's look at what's really going on.
First things first: Who said this is the worst possible time to invest? It seems pretty good to me. The Federal Reserve's QE3 is still doing its thing, pushing investors to take more risk. Corporate profits are 35% higher than their peak during the last cycle. More people are getting jobs. Homes are selling at higher prices. Valuations seem okay.
So really, some say it's the wrong time only because stock prices are higher than they were last year. The thinking is that you shouldn't invest now because you could have bought stocks for less six months ago. That's not much of a reason.
Yes, people should have managed their risk more effectively going into the 2008 meltdown. Yes, they sold at the wrong time. Yes, they realized they had no plan while standing on the ledge. You would back off too if you realized you didn't do your homework and were totally screwed
Let me give you some 'advice'. I don't care if you were stupid and switched to cash because of last year's fiscal cliff nonsense – no judgments from me. I don't care if you freaked out and dumped money in bonds funds over the past few years – you did well and got paid.
I do care that you move forward today. Don't let armchair financial journalists get you off your dime. I am a professional wealth manager for everyday multi-millionaires, and a few rich people too. I am putting fresh cash to work today.
Here is how.
Get a financial plan. I do them all the time. The trick is to match the portfolio with the plan. The plan will dictate what you need to do. Stop asking inane questions like 'is this right time to blah, blah, blah'. It is always the right time to have a balanced, risk-managed portfolio that is hand tailored to your needs. Do you need to be fully invested in the stock market or in cash? How does that further your financial goals? A real plan will tell you what kind of risk and return you need to take to meet your financial goals. This way, you never guess how much you should have in stocks or bonds or Ponzi schemes -- your plan does the work for you.
You can still watch the news and be addicted to financial blogs. It's simply fun to watch the world through the manic lens of media. I know, I am part of the problem. Just remember that your portfolio should have the parental locks you would assign a 4-year old. This way you can avoid liberals or conservatives in our politically driven markets to sway your opinion. Don't' you want to tell everyone to piss off? I know I do.
Lee Munson is the founder and CIO of Portfolio, LLC. The opinions expressed in this commentary are solely his.
U.S. stocks have rallied nearly 15% since the start of June, and one expert said that means the market is ripe for a pullback.
"We've just come too far, too fast," said Sean Clark, chief investment officer MOREHibah Yousuf - Oct 4, 2012 2:42 PM ET
The stock market keeps going up, and investors keep cashing out.
Mutual fund investors pulled $5.1 billion out of U.S. stock mutual funds for the week ended Sept. 26. The prior week, investors removed $4.8 billion from these funds, according to data from the Investment Company Institute.
The exodus from the stock market has picked up speed since the Federal Reserve announced another round of quantitative easing, or QE3.
By buying more MOREMaureen Farrell - Oct 4, 2012 12:45 PM ET
Mutual fund investors shrugged their shoulders at the Federal Reserve's latest ploy to stimulate the sluggish economy.
In the first week following the Fed's launch of a third round of quantitative easing, or QE3, investors yanked $4.8 billion from U.S. stock mutual funds, according to data from the Investment Company Institute. That was MOREHibah Yousuf - Sep 27, 2012 10:43 AM ET
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.
Gold is often derisively referred to as an investment that only MOREPaul R. La Monica - Sep 25, 2012 12:53 PM ET
The Bond King came out swinging against the most recent easing plans out of the Federal Reserve and European Central Banks on Twitter late Monday.
Gross: Central banks are where bad bonds go to die. MOREHibah Yousuf - Sep 18, 2012 1:53 PM ET
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, MOREPaul R. La Monica - Sep 18, 2012 12:58 PM ET
Fresh stimulus action from the Federal Reserve drove commodity prices sharply higher Friday, but experts say don't expect the QE3-fueled boost to last long.
Crude oil prices briefly topped $100 a barrel for the first time since early May Friday morning, as investors grew encouraged after the Fed announced a third round of quantitative easing, or QE3, saying it would buy $40 billion of MOREHibah Yousuf - Sep 14, 2012 2:25 PM ET
In a classic case of be careful what you wish for, shares of AT&T (T) and Verizon (VZ) both tumbled more than 2% Friday morning even though pre-orders for Apple's (AAPL) eagerly anticipated iPhone 5 sold out in under an hour. Meanwhile, Apple hit another all-time high and continued its march toward $700.
Why are investors dumping Big Red and Ma Bell? My colleague David Goldman has already explained how the MOREPaul R. La Monica - Sep 14, 2012 11:27 AM ET
The Federal Reserve is opening its wallet even wider with its latest round of quantitative easing. But this time around, the Fed is expanding its purchases of agency mortgage-backed securities as opposed to just buying more Treasury bonds.
So that begs the question: What the heck are agency mortgage-backed securities?
These bonds MOREMaureen Farrell - Sep 13, 2012 4:55 PM ET
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