2017 has proven to be a winner for US stocks, with a posting of the best run in the past 25 years. In fact, most everyone in the stock market is happy about the huge upturn that has taken place. “After the first quarter alone the Dow had gained nearly 5% with the Nasdaq gaining close to 10%, and records for the Dow crossing both the 20,000 and 21,000.”[i]
But not everyone is jubilant about the sustainability of such gains, and you shouldn’t be either unless you have a serious case of amnesia. Looking back at the most recent recession, 2008 and 2009, earnings were falling faster than prices. This was triggering buying signals for those technically trading the market, months after the cost was prohibitive.
Expansion in the market occurs based on emotions as well as value and only considering the technical aspects of the market can trigger illogical responses that would normally be somewhere you wouldn’t venture near. Security, safety and sustainability are pivotal points of concern for most people. But getting caught up in the rapid expansion of any market, whether it be the real estate bubble of 1982, the Dotcom bubble of 2000 or the subprime lending bubble of 2008 can be fatal for you financially.
That is because markets are fickle. They are driven by, not just the cost or value of something, but by people’s emotions, and emotions can swing rapidly! That is why the stability, security and sustainability of participating whole life insurance is historically so popular. With participating whole life insurance, you don’t lose the gains you have made when a market correction happens, plus you continue to participate in the profits of the insurance company who issued the policy. Obviously, insurance companies are lauded for their risk avoidance and therefore provide an average to above average long term growth potential.
At the same time, if you find opportunity to create more rapid growth, you can always continue to have the stability, security and sustainability of the participating whole life and leverage it to take advantage of the opportunity without losing the long-term growth the policy affords. That means you can benefit from the best of both worlds, rapid growth and sustainability.
So, enjoy the Trump Bump, but be fully aware that all good things have to come to an end. Be prepared and be saving at least 10% of your gains by paying participating whole life insurance premiums. Then when the Trump Bump pops, like all bubbles do, you’ll enjoy the rewards of preparing for both instead of picking yourself up off the financial floor.
[i] CNN Money: Trump rally alive and kicking after first quarter, Matt Egan March 31, 2017