Faith in the Future

Faith in the Future

Faith rarely gets mentioned when discussing how to successfully invest.  I’m not referring to faith in a religious sense, but faith that the markets will go up over time, albeit with temporary and sometimes drastic downturns.

Ironically, as the market makes new record highs on an almost daily basis, pessimism, skepticism, and nervousness still seem to be the prevailing sentiments.

I’ve read articles that say that investor optimism is rising, but they must be interviewing different people from those that I’ve been talking with.  Virtually everyone I know has significant skepticism with regard to current market values.  I’d honestly like to know who is admitting market optimism right now.  Somebody besides Jeremy Siegel.

And interestingly enough, everyone seems to have a reason for their pessimism.  Valuations, fraud, falling corporate profit margins, bond bubbles, interest rate increases, student loan debt crisis, federal debt crisis, race relations or simply because we’re at all-time highs.

Even those who don’t have data to back up their skepticism just embrace the current president and political discourse as the reason for their feelings about the markets.  An understandable thought process.

I’m not disregarding any of those thoughts since comparatively speaking, the market is high as far as valuations go, but that doesn’t mean a crash is around the corner.

I’m not saying that you have to be an optimist, but that you must have faith in the future.  That being said, I’m not sure where faith in the future ends and optimism begins, and I’m not sure it matters.  But I know that faith in the future is critical to your portfolio’s long-term success.

Faith in the future that we will keep innovating.  And this innovation will create new and different jobs and opportunities.

Faith in the future that this will bring costs down and make things available to people worldwide that were never available before.

Faith in the future that we’re extending our own lives via amazing research in the medical space.

Faith in the future that we will eventually solve our energy problems.

Faith in the future that as each day passes, fewer and fewer people are living in poverty than ever before.

Faith in the future that you have a place in this world and that our fellow man is inherently good.

Faith in the future that our children will live in a better world than we do today.  (As a father of two young children, I have a lot to say on this topic for a future post.)

Faith in the future that the markets will go up over time due to a multitude of reasons.

Faith in the future is a foundational concept to successful investing, and yet it receives little attention.  So many focus on asset allocation and charts.  And I’ll admit that I love those types of articles.

But if you refuse to believe that the market will be (significantly) higher in 10/20/30 years, then it is going to be extremely difficult to plan financially.  I honestly don’t know how one might make successful long-term portfolio decisions with a long-term pessimistic viewpoint.

Faith in the future is as essential to your long-term portfolio as oxygen is to us as humans.  Because whether you admit it or not, without faith in the future, you’ll find yourself trying to find the right entry and exit points for various market conditions.

It will be difficult to ride out the downturns because you’ll be too busy telling everyone, “I told you so” and you won’t know when to get in again (if you were even in the market to begin with).

It will be difficult to embrace markets pushing new all-time highs since you’ll be waiting for the other shoe to drop.

Let’s face it, investing is hard, but successful investing without faith in the future is virtually impossible.

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