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T he truth about investing for the long term got another boost of credibility last year because of the surprisingly strong performance of the U.S. stock market. In 2013, the U.S. stock market had its best year since 1997. The S&P 500 Index had an increase of more than 32 per cent. Experts who forecasted the U.S. as being a poor place to invest are again showing investors that predictions should be ignored. Diversi cation and long-term investing is what wins; not predictions. The challenge is uncertainty. Investors often look at credible sources to provide some insight into how the world will unfold and then try to pro t from that information. The more reputable the source, the more people are likely to believe what they say. Now that the year has ended, we can look back at the headlines from some of these most credible American sources that falsely predicted a poor performance of their stock market. In January 2013, the Financial Times started the year by proclaiming a "rebirth of equities ain't necessarily so." Then in May, it stated "stock market optimism on this scale hard to explain." The Wall Street Journal was no better. In February 2013, its headline was "Scant Pickup in Economic Growth for 2013." The newspaper kept its negative tone and in July of last year stated "As Investors Rush in, Stocks Are Sending Warning Signals." In August, it was "Lofty Diversification, long-term investing wins in 2013, not predictions Dollars & Sense Peter Watson Guest Contributor 17 | Thursday, January 23, 2014 | OAKVILLE BEAVER | www.insideHALTON.com Pro t Margins Hint at Pain to come for U.S. Shares." In early October 2013, The Wall Street Journal said, "Get Ready for a Drop in Stock Prices." Following in November with, "Is this a Bubble?" The headlines were wrong. In fairness the U.S. has faced some signi cant obstacles in recent years. It had mismanaged its mortgage lending practices and that caused its real estate market to collapse and drag the rest of the world into a long and dif cult recession. Our southern neighbour was starting to lose its swagger on a number of issues and its political process seemed broken with battling politicians stuck in self-interested rhetoric. The American image was best captured when the once proud and mighty city of Detroit declared bankruptcy in July 2013. The U.S. was broken and who could blame a cover story in November 2012 warning investors "to get ready for the recession of 2013." Our job as investors is to differentiate between the media's ctional, misleading headlines and the cold hard truth of investing. So, let's look at these misleading headlines from their perspective. The media is not in the business of making predictions. They do predict but their purpose is to make money from their product, which can be a newspaper, magazine or whatever else they sell in order to make a pro t. How can we expect the news media to predict the future accurately when the most quali ed, hard-working money managers in the world cannot predict with consistent accuracy. If managers' predictions were accurate their investment returns would be above average and would beat the market, which so many credible sources of evidence prove is not the case. Our advice is simple. Ignore the headlines of the day because they are just random guesses. There is no magic to investing. There is no short cut. The proven principle of buy and hold works. Second guessing the market by using meaningless predictions is a waste of time, energy and money. -- Submitted by Peter Watson, MBA, CFP , R.F .P ., CIM, FCSI., Certi ed Financial Planner Open House January 24-31, Come in and try the Y with your family! y l i m a f Yourngs here belo A YMCA membership is the perfect way for you and your family to get active -- and spend quality time together. Our membership packages are all-inclusive! Take swimming lessons, work out, try group fitness, play sports, rock climb and more ­ all included in an affordable monthly fee. Connect with us! YMCAOakville @YMCAOakville YMCA of Oakville 410 Rebecca Street, Oakville T: 905 845-3417 E: info@oakville.ymca.ca ymcaofoakville.org YMCA of Oakville Scan to see a video overview! Peter Gilgan Family YMCA Call the experts Kerry & Patricia for a free consultation Serving Oakville and the Halton Area 905-815-9795