The Stock Market Always Makes Sense

What Kids Can’t Tolerate

I know you might be thinking, “What do kids have to do with the stock market or your financial future?” Sit tight and bare with me for a minute. There are two things that kids can’t tolerate: 1. Not knowing the rules and 2. Not feeling a sense of belonging. If you have kids, work with kids, or have been around kids you can see this clearly. When the rules are ambiguous there is at best confusion, but at worst a tantrum. If a kid doesn’t feel like they belong they may withdraw or overcompensate. The one thing you can do to ensure your kid is well adjusted to their environment is to create clear and consistent rules and make sure they feel like they belong. Like they have a home.

But the problem with this is that because kids want to belong they will naturally be attracted to anyone or anything that gives them that sense. So if you are born with parents who struggled financially then there is a high chance that you may also struggle financially. You want to feel like you belong to your family and part of the sense of belonging will take the form of the modeling of ones parents and the mirroring of those parents’ behaviors by their kids.

When We Grow Up

When we grow up we don’t get away from being a kid entirely. We still need to feel a sense of belonging and we still need to feel that we understand the rules. Without that adults can feel isolated and cheated.But as adults we also need to earn, grow, and protect our money. So we get into the stock market. And often times we feel like the stock market is lawless. We feel we don’t know the rules and we feel cheated. At the same time if our sense of belonging is rooted in financial struggle, we may unconsciously not even want our money to grow. And the cards are stacked against us. Even people we trust give us bad advice.

It Doesn’t Make Sense

It doesn’t make sense that the US dollar is going higher after the Fed printed three trillion dollars. It doesn’t make sense that the stock market is going higher after Trump was elected. It doesn’t make sense that gold is falling. But you know what? Does nature ever make sense? Nature is nature. Even in catastrophe. Think of forest fires. Are those fire wrong? No, of course not. Mother nature is never wrong. It might be cruel and seemingly unpredictable at times. But not wrong.

So how does all of this connect to the stock market? Well switch out nature and add in the stock market. Or any market. Bonds, real estate, currency, commodities, etc. Just like nature each of those markets is never wrong. They have never been broken. But often we think, “this doesn’t make sense.” Well what doesn’t make sense is actually your point of view of the market. So switching your mindset to say, “the markets always make sense,” will help you protect you and your money.

The Stock Market Always Make Sense 

Look at the chart of the S&P500 below. Follow the pattern. The S&P500 has been in an uptrend for the past 8 years. Whether it should or shouldn’t be in an uptrend – the fact is, is that it is. And it makes sense. Of course while the S&P500 has been in an uptrend, there has been some volatility. But it still continues to climb higher. Despite what the news says, or the “pick-of-the-month” newsletter industry. And it’s both of these things that skews our perspective to think the markets don’t make sense.

It’s our point of view that doesn’t make sense. You need to ask yourself better questions so you can be better aligned with the nature of the markets more often. You can check out the two questions that we ask ourselves of the market regularly here.

What Exactly is the Stock Market?

The stock market is hundreds of millions of people trading hundreds of trillions of dollars. How can you argue with  hundreds of millions of people? Maybe you don’t like where the market is going. I get that. But you can’t say that it is wrong. The market is never wrong. What matters is what’s actually happening. When you go out to sea, you wouldn’t blame the weather for your mishappenings. You’d blame yourself for not checking the weather reports or looking out toward the dark clouds in the distance and not turning your boat around.

The Golden Rule of the Markets

The first rule of the stock market is that the stock market always makes sense. They are always right. What may not be right is your point of view. Nature always makes sense. The markets always make sense. We might not know exactly why what’s happening is happening but we can do our best to align our money with what’s happening.

You hear so many people out there trying to scare you. They are saying the market is going to 0. Don’t listen. Instead, just look at the charts. The charts are never wrong.

The Markets Are Never Wrong


RCPeck-Dig Signature.JPG     
RC Peck, CFP


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