“History does not repeat itself, but it does rhyme.”
– Mark Twain
With all the news of troubles in Europe, a slowdown in China, U.S. deficits and whatever happens in the Middle East, market pundits have no shortage of explanations for why the market goes up or down on any given day. There is always an explanation.
I watched a panel discussion of market analysts on CNBC several weeks ago, and they all had their explanations — explanations that differed, but were delivered by highly educated analysts in language that was mostly incomprehensible to the layman.
Were they all correct? That would be impossible.
One simple explanation that anyone could wrap their head around was delivered by Jeff Saut, Chief Investment Strategist of Raymond James & Associates. The market, according to Jeff, has been following a pattern that is typical of an election year.
Could it all be that simple? You wouldn’t think so, based on the reaction of the other panellists — all highly educated, highly-paid and highly respected on Wall Street. That is not to suggest that the past can tell us what the future holds. I agree that history does not necessarily repeat itself. But I also agree with Mark Twain that it often rhymes.
Can the study of market history make us better investors? I think it depends. If your goal is to try to time the markets, probably not. But if you simply look at the past with the view of putting the events of today into perspective, I think it can help immensely.
And if there is one thing I have learned from years of being in this business, it is this: following the news of the day does not make you a better investor. In fact, studies have shown the opposite to be true.
On Oct. 17 we are hosting a presentation entitled Lessons from the Past — 100 Years of the Markets. For information feel free to call us at 250-594-1100 or e-mai firstname.lastname@example.org.
Jim Grant, CFP (Certified Financial Planner) is a Financial Advisor with Raymond James Ltd (RJL). This article is for information only. Securities are offered through Raymond James Ltd., member Canadian Investor Protection Fund. Insurance and estate planning offered through Raymond James Financial Planning Ltd., not member Canadian Investor Protection Fund. For more information feel free to call Jim at 250-594-1100, or e-mail at email@example.com. and/or visit www.jimgrant.ca