DID YOU CASH IN ON THE ALL-TIME MARKET HIGH?
By the time you read this post, this may already be a moot question. A correction, or worse, a Bear Market, may have begun. If so, you probably waited too long to cash in. Indeed, you may have become a victim of what
stockbrokers – among themselves, but rarely to you – call “The Paper Gain Syndrome”.
Gains in the market that are not cashed in are “paper gains” and are, therefore, meaningless. As long as the market keeps ascending, however, those paper gains look wonderful, and we all feel richer. Moreover, the old saying, “Don’t fight the market” takes over, and we are reluctant to get out “too soon”. We don’t want to see the market continue to go up after we have cashed in. In short, as long as the paper gains continue, we feel compelled to hang in there. This is the “Paper Gain Syndrome.”
Investment advisors who deal exclusively in stocks, bonds, mutual funds, ETF’s and managed accounts are quick, however, to talk to you about “paper losses.” When the markets decline and your statements show negative returns, you will often be told not to panic. “Be patient. Ride
it out.” You are told, “the market will make back the loss. Over time, it always has and over time it always will.”
Those of you who have been my clients over the years know the problem with this “over time” philosophy. When you are in your 30’s, 40’s or even early 50’s, you have lots of time for the market to rebound. Once you approach your 60‘s, however, waiting anywhere from 4 to 10 years to get back what you lost – to get even – is not smart. “Over time”, therefore, means something entirely different to us as we get older.
But, let’s return to “paper gains”. There is another old saying out there that I think applies here. It is “Pigs get fed and hogs get slaughtered.” In other words, it’s okay to take your profits when the market is at an all-time high. Even if the market goes up some more after you get out, cashing in and making paper gains real gains, is always smart.
So, did you cash in on the all-time market high? I hope so. But, what if you haven’t yet and the market is still up over 21,000? There is no time like the present! Take your profits and congratulate yourself for your timing, wisdom and good luck.
What if the market is already in a downward trajectory – you missed the top – and your paper gains are disappearing or have disappeared. I am going to give you the same advice that I would give to those of you who did cash in. Please consider an Index Annuity for some of your risky and fee-laden assets. We currently have Index Annuity contracts that provide bonuses of 7% to 18%, guaranteed growth rates of 6% for income purposes and enhanced long-term care and death benefits. We also have new plans that offer very generous annual point-to-point caps of 14% and monthly point-to-point caps of 4.5%. And, these new plans have NO FEES.
Please call us at 913-661-9492 if you have any questions or need more information about any of this. As always, I look forward to talking with you soon.