“Past performance is no estimate or guarantee of the Future” is printed on mutual fund prospectus and all manner of investment ads from banks, and broker-dealers. So, if the concern is of the future, why look at the past? Most broker-dealers will advise you to invest, based primarily on the past history of the stock market! But they just said that is Not an estimate or guarantee of the future?
Okay, so there is some reliability by looking at the past, but can we afford to “set and forget” our investments? Most of the past performance relied upon was pre Internet times. Until about the last 10 or 15 years only big companies (Wall Street) had access on a daily basis to the information and implementation of trades. Now approximately 85-90% of America and the investing world has access. This is a different world than the first 80 years of stock market history, so often used in today’s invetment decisions. Those days were totally controlled by Wall Street. Wall Street still has great control, but times are changing.
What does this have to do with managing your hard earned money, needed to maintain your lifestyle for the rest of your life? Everything! To rely upon the old philosophy of “buy and hold” because that has always worked, is not the way of the future. The future success requires frequent monitoring and tactical management. Tactical management adjusts the portfolio according to the current outlook not just coasting along depending on history to be proved. The “buy and hold” strategy cost many middle class Americans tremendous losses in their portfolios that some have never recovered from. The “buy and hold” may have worked for the long term accumulation phase, but cannot work for everyone in this new decumulation phase of life. The investments are being liquidated in mass. Us Boomers are the market.
The “buy and hold” might work To provide an income for the rest of your life. But, who can afford to risk their investments based on a history that was very different from the present and not consistent with a projection of the future? A tactical management style provides the chance to preserve your investments in turbulent down times and take advantage of the growth times.