The market is a difficult labyrinth to navigate.
Even if you had the news ahead of time, it would be impossible to figure out the market’s reaction. 2020 is the ultimate example of this being the case.
And this is why the best solution to combat the complexity is to automate your investments. Had you invested every two weeks in a 60/40 portfolio, hard as it is to make sense of, you would be at an all-time high today.
Some people might take issue with these charts. For example, I’m “conveniently” leaving out valuations. Or the fact that nobody actually holds this portfolio. Or the fact that this would look different without the fed. Or the fact that we should revisit this in 12 months. And on and on we go.
It’s true that it didn’t have to turn out this way, and I definitely did not think it would. But none of this matters. What’s important to understand is that the simplest and most effective way to invest for your future is to automate your purchases. If I’ve learned nothing else about investing, it’s that consistently making the right decision during difficult times is an impossible burden to bear.
To be clear, this is not an argument for index funds over actively managed ones. It’s an argument for not letting yourself today sabotage yourself tomorrow.
This also isn’t an argument about being bullish or bearish. It’s an argument for not needing to have an opinion on the market tomorrow to be confident that it will be higher in the future.
Automating your investments frees you from the shackles of worrying about what the market does next. If 2020 hasn’t convinced you that predicting the future is impossible, I’m afraid nothing ever will.