How to be a Strong Investor without Really Trying

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Investing is not for the faint of heart. Nowhere is it implied or explicitly stated that markets operate smoothly or calmly. That would be tantamount to expecting a long ocean trip to be smooth sailing all the way. Ships equipped with radar can anticipate storms but cannot outrun them; the point is to weather the storm and carry on once the seas are calm again. Inexperienced investors are like ship captains who never have been storm-tested. The fastest way to calm for such investors is to sell out of “risk” assets and go to cash. While this solution may reduce the pain of loss in the moment, it risks giving up long-term return potential and heightens the risk that investors will not reach their goals.

For followers of Global Perspectives, there is a North Star that can help them navigate the storms: remember, “Fundamentals drive markets.” Today we see a great example of positive fundamentals — a blowout nonfarm payrolls report of 312,000 for December, resulting in a 3.9% unemployment rate, rising wages, an increase in the participation rate and positive revisions of 58,000 from prior months. Despite aggressive policy tightening from the Federal Reserve — eight interest-rate increases over the last two years — economic growth and jobs are surging due to the powerful pro-business policies of lower taxes and lower regulatory costs to businesses.

Please read the Voya 2019 Forecast “The Storm before the Calm.”

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