5. You have a LONG way to go
What an amazing 2013, right? Well, when you thank your lucky starts for those 25 percent gains you enjoyed this year, you may want to pray for a repeat performance in 2014. And 2015. And 2016…
Because even after these gains, the average American is woefully behind when it comes to retirement planning.
In early 2013, Fidelity was quick to announce that its average IRA balance this year hit a five-year high… but that was to just $81,000 . The same for Fidelity's average 401k balance of those over 55 — it was up nicely, but only to $255,000.
The old rule of thumb used to be that a retiree needed about 10 times their last year's salary to retire comfortable. But nowadays, with Americans living longer and health care expenses spiraling ever higher, even a million dollars in your retirement portfolio may only buy a modest retirement should you be lucky enough to live 20 to 30 more years after quitting the rat race.
Don't use 2013 as an excuse to take it easy on your retirement plan. You likely have a very long way to go still.
6. Personal preference is not an investing strategy
As I wrote a few months ago, Warren Buffett's folksy "buy what you know" advice is a portfolio killer for people who think personal preference is an investing strategy.
Your frustration with Facebook ads and privacy settings didn't stop the stock from doubling in 2013.
Your grim assessment of brick-and-mortar retail didn't stop Best Buy (BBY) from jumping 250 percent.
Your mockery of Hewlett-Packard (HPQ), its cheap laptops and overpriced printers hasn't stopped the stock from surging 80 percent this year.
Remember these lessons.
Also, remember the flip side of personal preference is also true. Case in point: Those Apple (AAPL) fanboys who were super bullish a year ago and had a big bucket of cold water thrown on them with this year's gross underperformance.
There are a host of amazing companies out there that may crash and burn in 2014 despite their consumer appeal. And plenty of much-maligned companies will rise.
That's Wall Street. So make sure that your investing thesis is based on market trends and earnings data… not just consumer hype and the not-so-informed opinion of your neighbors.
7.You can't win if you don't play
Look, calling the next bubble is fun if you're a financial media troll looking for page views or if you're just making conversation while huddled in your bunker this holiday season.
But bubble talk has been incredibly unproductive in every sense over the last few years.
And it will continue to be so in 2014.
Right now, unemployment is 7.0 percent, the lowest level since 2008. GDP for third quarter was revised up from 2.8 percent to 3.6 percent. The Investors Intelligence Survey conducted after Thanksgiving showed about 85 percent of investors were bullish — the highest reading since 1987.
Oh yeah, and the S&P is up 25 percent, its best year since 2003.
You think it's really all going to stop NOW, after what we've been through?
To be clear, I'd never advocate dumping every penny into stocks because of the big risk involved with that. But 2013 should be proof positive of there is ALSO great risk (or in economic jargon, "opportunity cost") that comes with sitting out the stock market.
If you keep sitting on your hands, you will never do better than the measly returns offered by the bond market and so-called "high interest" CDs.
If that's your idea of a winning hand, so be it. But if not, consider upping the ante for a few hands in 2014 – even if the lion's share of your portfolio is focused on capital preservation.
More from MarketWatch:
VIDEO ON MSN MONEY
What we should have learned in 2013 is that anything can happen in a market controlled by the Federal Reserve, even if it doesn’t make any sense at all. In fact, that’s the most likely thing that will happen under such circumstances, i.e., something that doesn’t make any sense at all.
Every investor has their own risk-reward value system, as it should be. I would rather be the guy who invested in things that will likely preserve the long-run purchasing power of his money than one who is betting the stock market will keep rising at ten times the rate of GNP growth (like it did last year), only to find that it will take ten years to get my money back after it crashes.
“Past experience is no guarantee of future performance”. Best disclaimer ever.
If you can swing a hammer and float a trowel a lil' real estate seems so much easier and profitable than the market. So many neighborhoods sprung up after WWII and just about every one has a house or two that need a bit of work but are going for nearly 1/2 of the surroundeing homes. Elbow grease and materials , sell it for 10k below the rest and still make good profit.
1-Cash in hand always beats a financial sheet or any piece of paper.
2-Never trust anyone who wears a suit with YOUR MONEY!!!!
It was a pretty nice year and we are down to the final hours....
Goodwill and Prosperity to all in 2014...
Take all the trash out and burn it. Biggest problem solved!
God bless a Repukelican free America!
The Guy couldn't just state 2013 was a great year for stocks and 2014 could go either way. Everybody is a freaking Genius when stocks are going up, the real tests comes when for extended periods, stocks move sideways or down. Then you don't hear jack from these fake Market Gurus. Of course then the jackals will tell you to hold to infinity, another sure way to lose your shirt and more as National Debt Soars and the Feds lose Control. Nothing wrong with taking profits. Greed will destroy the best investor.
Hey Brent the pensioner
I fail to see ANY difference between socialist party 'a' or socialist party 'b'; except for the rhetoric
""Fidelity was quick to announce that its average IRA balance this year hit a five-year high… but that was to just $81,000""
perhaps Fidelity forgets that many people have multiple mutual funds thru different institutions.
therefore they only see my ONE account with them and i have several with their competitors.....
so MY average is quite low and very misleading
I bought a majority of my current portfolio in 2009. It has done well. Not buying too much right now except for coal stocks.
Doesn't matter too much to me whether the market continues to rise so long as I am collecting dividends and distributions while on the ride.
If the market goes down, better to use that dry powder to load up again.
A politician. TELLING THE TRUTH?? What planet are YOU from?
As the old saying goes: Q: Know how to tell if a politician is lying? A: Their lips are moving.
Forecasting doesn't work, well then stop forecasting DOW20K and DOW30K. Stop forecasting that buy and hold works. Stop forecasting what will happen to long term bond funds. Stop forecasting yields returns on TIPS. Funny how a guy tells folks what not to do, then precedes to do it himself. It's no secret that Record Wealth Globally has been seen since the recovery from the Great Recession.
And yes, there has been a Recovery. We can debate all day to the Reasons but there absolutely has been a recovery. Nor has that recovery been solely low paying Jobs. There's a fracking Boom in this Country and those jobs pay well in comparison. Airlines are predicting a Record Year for Profits. We are seeing a Return to America Push for manufacturing. Auto Sales have almost recovered to levels not seen since before the Great Recession. So in spite of the negative aspects we hear from the Usually Suspects, things have never been as Gloomy as some have stated. Eventually that will changed, IT ALWAYS DOES. Boom and busts, that's our history.
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[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 added just over a point, holding its weekly gain at 1.0% while the Nasdaq lost 0.4%.
The major averages began the day on an upbeat note, but relinquished their opening gains during the first 90 minutes of action. The early sentiment was boosted by a better-than-expected nonfarm payrolls report for February (175K versus Briefing.com consensus 163K), but a closer look into the report suggested that ... More
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