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Prepare for Disappointing Stock Returns!
Investing in the stock market can be an exciting and potentially lucrative endeavor. However, it’s important to be realistic about the potential for disappointment when it comes to stock returns. While everyone hopes for significant gains, the reality is that the stock market can be unpredictable and not every investment will yield the returns you had hoped for.
It’s essential to approach stock market investing with a level-headed and realistic mindset. Here are some tips for preparing for potentially disappointing stock returns:
Diversify Your Portfolio
One of the best ways to prepare for disappointing stock returns is to diversify your investment portfolio. By spreading your investments across different asset classes, industries, and geographic regions, you can help protect yourself from significant losses if one particular investment doesn’t perform as expected. Diversification can help mitigate the impact of poor stock returns on your overall portfolio.
Set Realistic Expectations
It’s important to have realistic expectations when it comes to stock market investing. While it’s certainly possible to earn significant returns on your investments, it’s also important to understand that not every investment will be a home run. Keep in mind that the stock market can be volatile and that there may be periods of disappointing returns. By setting realistic expectations, you can avoid being blindsided by poor performance and make more informed decisions about your investments.
Stick to Your Investment Strategy
Having a clear investment strategy and sticking to it can help you weather disappointing stock returns. Whether you’re a long-term investor or a more active trader, having a plan in place can help you stay focused on your financial goals. It’s important to avoid making impulsive decisions based on short-term market fluctuations, as this can often lead to poor investment outcomes.
Be Patient
Stock market investing requires patience. While it can be tempting to panic and sell off investments at the first sign of disappointing returns, it’s important to take a long-term view of your investments. Remember that the stock market goes through cycles, and that even if you experience short-term disappointment, there may be better returns ahead. By being patient and avoiding knee-jerk reactions, you can give your investments the time they need to potentially recover and thrive.
Seek Professional Advice
If you’re feeling unsure about how to navigate potentially disappointing stock returns, it can be helpful to seek advice from a financial professional. A financial advisor can provide personalized guidance based on your individual financial situation and investment goals. By working with a professional, you can gain valuable insights and make more informed decisions about your investments.
In conclusion, preparing for disappointing stock returns is an essential aspect of being a savvy investor. By diversifying your portfolio, setting realistic expectations, sticking to your investment strategy, being patient, and seeking professional advice, you can better position yourself to handle potential disappointments in the stock market. Remember that investing in stocks involves risk, and it’s important to be prepared for both the highs and lows that come with it.
Good stuff Josh. Very good stuff. I love your informative lessons.
I really don't see how these PE ratios won't drop as you indicated given the cost of capital. I hope we never see circumstances where the Fed has to do all the gymnastics they have done over the past 15 years. Hope we can stick the soft landing so many think we will accomplish vs a more severe recession period. Thanks for the content, Josh!
Never get out of the market.
Great Video Josh your a great teacher. I have been putting money in EDV and VGLT also BND in retirement accounts. In Brokerage account VTI. Also your a great guy Josh I love your shirt!
Not going to achieve high earnings growth while depopulating.
Josh how do we use our earnings to fund our retirement distributions? Im planning on earnings of apx 48k and distributions of 36k in retirement until RMD kicks in
What a T Shirt Love it!
Ya but Josh, at the 2008 Great Recession, they were saying this same thing. Stocks are overvalued. I listened and went to safety for years. Look at stock gains since. I think the natural move for PE ratios is generally higher as more and more people invest in stocks. But now we have higher interest rates. This should muffle some of this PE expansion. But don't do what I did and go Guaranteed Interest for long periods of time…. a good way to miss out on stock market returns even if they are elevated. And from experience, the next 33% correction should be bought in with both fists lol. Good video again sir.
My friend, hydraulic fracturing and horizontal drilling are two different things.
And in 10 years, these projections will all be forgotten. These guys can’t get next year right. So we’re to believe a 10 year forecast?
Josh, there's some on YT that wanna be you (they never can!), and there's one that even whines about those who've written books. (I ain't got time for that N A z i.) I won't name names (he's not worth the font). You're the best with retirement planning/knowledge and the best with off-the-top-of-the-head stuff as well. And you're the best YT live-streamer. I should probably click the doo-be-doop sometime to show my appreciation!
For 30 years they have been talking about the bad next decade.
With respect to earnings growth, I'd be concerned with capital cost, respecting the refinance risk of borrowing rates.
You could be right!
PE ratio ex the MAG 7 is in the teens.
No one knows. No one. No formula can forecast such a complex system. Maybe I’m wrong. Does not matter because you have to stay the course anyway. So it’s not gonna change what you do. Better to live and not worry
Josh, you said prepare for disappointing stock returns last year and my VGT went up 50% in 2023. LOL!
I don’t see inflation being that low unless the numbers we are given are outright lies. They are already highly suspect given how poorly reported inflation comports with my actual experience as a consumer.
Awesome analysis Josh. Thanks.