Planning, Not Prediction,
We are constantly asked “What direction do you think the market is headed?” or “Is now the best time to invest?” It is very tempting, even for us, to start weighing the variables, process the current sentiment, refer to the charts and draw a conclusion. But we never predict. We plan. We know that in the near term, the market may go up, trade sideways, or fall. In some cases, the movements may cause euphoria (on the way up) or depression (on the way down). Both of these emotions, especially greed and fear, can lead to rash decisions. All the while, the press is bombarding us to take action… right after the event takes place.
So rather than buying into the notion that we can somehow predict what is going to happen and liquidate out of harms way, we focus on constructing our portfolio with a hedged strategy that limits potential losses to an acceptable level based on your risk profile.