Procrastination sabotages the best laid plans, and that includes investing plans.
Many investors suffer paralysis through analysis. They’re simply unable to pull the trigger because it never seems the right time.
That’s a problem, because there never is a “right” time. Markets always operate under a blanket of uncertainty. Stocks will always appear either too richly valued or too poorly valued. Interest rates will appear to high or too low. The economy, too, will always appear to run sub-optimally.
Geopolitical conflict will always exist. There has never been a time in human history when peace and comity reigned: Ukraine and Russia, Scotland and the United Kingdom, the West and ISIS are not outliers, they are the normal course of events. If you wait for perfection before delving into the market, you’ll be waiting in perpetuity. Perfection is not of this world.
But you don’t need perfection to succeed. Economic growth is the norm over the long haul in much of the world.
In 1950, the S&P 500 index was priced at 25; today its price approaches 2,000. U.S. real GDP (inflation adjusted) was $2.27 trillion 64 years ago; today it’s $16 trillion.
Consider all the world events that occurred during the past six decades that weighted on investors minds: the Cold War, the Korean War, the Cuban missile crisis, two Kennedy assassinations, the Vietnam War, Watergate, 1970s stagnation and inflation, Russia’s bond default, Long-term Capital Management, the bursting of the tech bubble, 9/11, the bursting of the housing bubble, a banking-system meltdown. This is a mere scratching of the surface.
Many times these events (or noise) lead to exceptional entry prices. But even if you had failed to exploit the contrarian opportunities, you’d still be ahead today. This includes anyone whose timing was outright atrocious: If you’d done nothing but bought at major market peaks – 1987, 2000, 2007 – you’d be in the black.
S&P 500: Long-Term Price Appreciation
There is always value somewhere.
In late 1999 and early 2000, many consumer-product stocks were cheap, having been relegated to also-ran status due to the technology fever that had swept the country. At the time, I remember premier stocks like Altria Group (NYSE: MO), ExxonMobil (NYSE: XOM), McDonald’s Inc. (NYSE: MCD), and even Berkshire Hathaway (NYSE: BRK.a) offered enticing value, even though The NASDAQ Composite Index and the S&P 500 were trading at unsustainable multiples.
Though I don’t see the stock market as being alarmingly overvalued, I know many investors are nervous. They want a market pullback, a resolution to the Ukraine/Russia imbroglio, a possible U.S. military strike on Syria or Iraq, more U.S. GDP growth, or a Federal Reserve move on interest rates before investing. They want the blanket of uncertainty lifted before investing. They’ll have a long wait.
Regardless of what’s occurring in the world; regardless of how overvalued the market might appear, I’m always seeking value-priced investments. For the most part, I’ve found them. Many times these values are found in the most uncertain of circumstances.
At High Yield Wealth, we’re still finding income value at home, and we’re finding even more of it abroad. There is always value if you’re willing to seek it out, and we’re willing to seek it out.
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