Emotion and Failure to Have a Plan, Says STA Wealth Management, Could Derail Your Financial Security
The economy is growing like gangbusters and the numbers keep going up, and up, and up. That’s getting some people a little nervous.
Historically, the vulnerability of a bull market is that in the avalanche of good news, even the slightest bad news can shake confidence, says STA Wealth Management partner Michael Smith. “Too much good news can be bad news when all the headlines and all the sentiment is that everyone is positive, you can get a pessimistic attitude that we’re getting a little too cheeky and markets are getting a little too extended.”
And Smith says that's why you need to have a plan and keep emotion out of the decisions you make to manage your portfolio. If you fail to plan then plan to fail, even if consumer confidence hasn't been this high in almost 20 years.
Stick to your plan, says Smith. “It wasn’t too long ago they said ‘3% GDP?!? No way, no how!!’ Well, guess what? We’re at 3% GDP. What if we continue this trend? This could stay like this for a while, but the key is have a good plan and be prepared for the worst,” he advises.
Smith says conditions are ideal for shoring up your personal rainy day fund.