Risks inherent in all financial investments

Farm Forum

What I am going to share this month has absolutely nothing to do with anything even remotely resembling cold hard financial facts. And not surprisingly, I am referring to the financial markets. Contrary to what some of the highly educated and well-heeled analysts would have you believe, what the markets do can never be completely explained with just numbers. No matter how many complicated ratios or complex graphs are produced and promoted. Honestly, how many folks really understand exactly what the gurus are trying to convey with these things anyway? Heck, I am not even so sure the people who create this stuff believe all of it, let alone how much real value they actually provide anyone.

That being said, I think we can all agree that base human emotion has a much more dramatic effect than the overly logical traders would ever care to admit. Something that I personally find interesting is that the very folks who preach reliance on nothing but sterile detached analytical data are the first ones to fly into a panic any time there is a scare from of any number of sources in the world. It would be comical if it weren’t for the fact that it can have the effect of causing significant swings in world markets. And, with the constantly evolving state of world events today, the potential for these kind of market movements is even more prevalent.

Without listing all the possible flare ups or being so bold as to make predictions, I think there are a few worth mentioning that should be of at least passing concern. First in my mind is the entire Middle East mess with the very plausible chance major regional war could erupt. There are also all of the factions of zealots in that area that want with every fiber of their being to damage Americans in any and every manner conceivable. Russia is far from a tame bear, nor is China or North Korea looking out for our interests. Cyber attacks are a very real and growing possibility. And on it goes. Even some of our own citizens don’t care much for the United States as is witnessed by the burning and looting of their own neighborhoods. They justify the criminal actions by crying foul about injustices whether real or perceived… it really doesn’t seem to matter.

The point I am trying to make here is that you should be fully aware any money that is invested in the stock market whether directly or through other financial vehicles has inherent risk due to a number of forces. We must also never forget that an ever growing number of these forces are well beyond anything you or I can do to control and they can and do have dramatic and lasting impact. This is not fear mongering nor is it meant to disparage the markets. Just simple facts that are often overlooked in an investor’s excitement at the prospect of obtaining large gains.

Unlike some of the conspiracy theorists, I am not advocating converting all of your assets into precious metals and hoarding it along with all of your doomsday items and your decidedly paranoid nature in your newly constructed underground bomb shelter. Quite the opposite. I am simply saying that it may be wise to shift some of your at risk money to good safe alternatives rather than being directly exposed to the myriad of scenarios that can affect the markets in a negative manner. There are some viable vehicles that offer far better returns than the depressingly low bank rates, too. Food for thought.

Dennis Foster has been helping families with financial and estate planning needs for over 20 years. He welcomes comments and questions and can be reached at 605-887-7069 or