For those watching the country’s trends, waiting for the end of the recession, one Cache Valley financial adviser says now is the time to pay attention.Mike Arnold of Edward Jones Investments said that time could be near.”It hasn’t been officially declared,” said Arnold, “but in the third quarter, which just ended, most economists had been expecting positive GDP, which is the definition of coming out of a recession.”He said there are a lot of positive indicators right now.”Unemployment is probably the one that is not pointing in that direction,” he said, “but most people have heard that is a lagging indicator and that is true.”Arnold said there tends to be four “emotional phases” in the market.”They are pessimism, which we just went through,” he said, “then skepticism, where we are right now. Optimism will be the next phase, where everybody’s feeling really upbeat. Then there’s euphoria where everybody’s starting to take speculative bets. That’s when you really have to be careful.”He said emotions are a strong motivator and must be contended with in advising people.”We’ve certainly gone through a traumatic time in the markets. But history shows us the market is cyclical. For people who don’t understand that, they really should not be in the market.”There will be ups and downs and the market doesn’t go in one direction forever. You’re going to have dips along the way and some of them are quite severe. The people that are most apt to get hurt are the ones that panic during those dips. Those who benefit the most are those who take advantage of those dips and treat it as a buying opportunity.”He said the most traumatic of recent times extended to March of this year.”The markets are up about 60 percent since their lows back on March 9. That’s a pretty good bounce back but we certainly aren’t back to the all time highs of October, 2007.”What indicators does he watch in market trends?”We really try to look at the macro picture rather than the micro picture. For the average investor it’s probably better not to get caught up too much in the minutiae of the daily announcements of what’s happening on the inflation front and health care legislation and all of that. There is a danger of seeing too many trees and not being able to see the forest.”Arnold said we’re in a period of recovery right now and the long-term question is whether this will be a drawn out recovery or a sharp recovery.Are people investing to the extent of five or ten years ago?”I think so,” he said. “The flow we’re seeing through our offices in Cache Valley indicate that. Looking at the big picture, you consider you’re going to retire in ‘X’ number of years and that means you’ve got to invest. You’ve got to keep putting money into the markets and you’ll be doing some of that in ‘up’ markets, some in ‘down’ markets and it will all average out in the long run.”What is the best investment strategy?”Diversify – don’t put all your eggs in one basket, obviously — buy quality investments, and hold for the long term.”
Cache financial guru says now is time to pay attention to financial markets
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