Stock market predictions and advice for investors


When stocks plunge, investors will move to cash and bonds. When stocks bounce back and set new highs, investors will dive back into stocks. If international stocks outpace U.S. stocks,

everyone will suddenly embrace international investing. Have the conviction to avoid the all too human instinct to chase past performance. Set an asset allocation target that meets your need

and willingness to take risk, and stick to it. This means you must sell some of what has done well and buy what has performed poorly. It turns out that it's better to buy low and sell

high than the predictably irrational reverse pitfall that many fall into. 5. PEOPLE WILL GET EXCITEMENT FROM INVESTING. The prospect of making a bunch of money fast can be exhilarating. But

that excitement (along with expenses) is the enemy of the investor. Typically, that which is hot is quick to turn ice cold. A balanced portfolio of stock index funds and high-quality bond

funds is far less exciting. You'll get even less excitement if you don't look at the performance very often (I'm still working on this one). Have the conviction to get your

excitement elsewhere. The late Nobel Prize-winning economist Paul Samuelson said, “Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800

and go to Las Vegas.” As we enter the new decade, remember that money gives the freedom to pursue whatever brings you happiness. Embracing these five convictions puts one on the right side

of my predictions and on the right path to financial freedom and, hopefully, happiness. _Allan Roth is the founder of _Wealth Logic_, an hourly-based financial planning firm in Colorado

Springs, Colorado. He has taught investing and finance at universities and written for _Money _magazine, the _Wall Street Journal_ and others. His contributions aren't meant to convey

specific investment advice._