Tuning out the noise of the “All-Time High” | Erik Averill, Brandon Averill, Justin Dyer | AWM Insights #75

Everyday, thousands of investors tune into their favorite business news channels and hear pundits discuss trends in the markets. They see flashy tickers at the bottom of their screen and listen to famous people in finance give their outlook on what the future holds. While dramatic and entertaining, most of what they listen to is erroneous. Our favorite business news channels are in business to make a profit, and the more eyeball’s they can get on the screen, the more they profit. In this episode, Erik, Justin, and Brandon highlight why all-time highs are not as important as we think they are. They discuss how having an actual strategy is a much better predictor of investment success, and how trying to predict the future is a fool’s game. EPISODE HIGHLIGHTS:(00:16) The news you should know: Markets are at an all-time high, the S&P 500 which is an index that captures the 500 largest companies in the U.S. is up over 100% from the low 15 months ago. (00:52) Airbnb’s revenue is up substantially compared to where it was during the peak of the pandemic, but its stock hasn’t performed as its revenue says it should. Yet another example of the unpredictability of a stock’s performance, and why fortune-telling is a bad strategy. (01:29) Is it a good time to invest when the market is at all-time highs? (02:38) Stop listening to your favorite business news channels. They make money by getting eyeballs on the screen; not by being advisors. In reality, market highs are a common event. (04:26) Just because the market is at an all-time high, doesn’t necessarily mean that stocks are too expensive to buy. If investors believe that the market will perform better in the future than performance today, then a higher price is justified, especially if companies continue to earn and profit.(07:03) Again, our favorite business news channels are businesses themselves. They don’t have an intimate understanding of your unique situation. (08:26) Those with a plan catered to their individual priorities win. Trying to time the market is a fool’s game. (12:21) Focus on what you can control: managing taxes, mapping your spending, having a diverse lineup of investments, and most importantly, having a strong understanding of your priorities. (13:33) Markets are risky. They can move up and down swiftly and dramatically. This is the price you pay to participate. (16:13) Let’s call a spade a spade - individual stock picking is gambling. (17:38) You have two elevators, one is attached by one cable and the other is attached by five cables. Which one do you want to be on in the event of an earthquake? Obviously, the one with five cables. In the same way, you should have a wide range of U.S. and International stocks. Resource: Should Do It Yourselfers Invest At All-Time Highs?