[Pictures] My Terrifying Flight Experience… And How It Relates to Your Nest Egg
“You’re losing altitude, Zach! Pull up!!”
My instructors voice pierced through my headset as I tried to keep the plane under control.
“Now your airspeed is falling! You can’t fly a plane without airspeed!”
Crap! I could feel the sweat beading up on my forehead as I shoved the throttle forward.
“Did you forget your heading? You’re supposed to be rolling out here!”
ARRRGHHHH!! So many things to think about just to keep one little plane in the air!
No, this was not a simulation. It was a real-life flying experience I had at the beginning of this summer. (And yes, I did wind up getting the plane under control and walking away from the landing.)
Ironically, some of the crucial lessons I’ve been learning about controlling an airplane also apply to managing your wealth in this turbulent market environment!
Take a look at the pictures and market “instruments” below…
Piecing the Instrument Puzzle Together
This summer, I’ve been taking some flying lessons at my local airport, something I’ve dreamed about doing since I was a kid.
No, I’m not at all interested in a career change. I just love flying and hope to be able to take my kids on short day trips from time to time. But as I got started in August, I worried that these lessons were going to be a huge mistake.
There are just so many things to keep track of when flying a plane!
Just look at all of the dials and indicators included just in the basic trainer plane I’ve been flying!
When I asked the instructor which one I needed to watch most carefully, he laughed.
“It depends!” he told me.
“If you’re landing, you’ll want to watch your airspeed and rate of descent. If you’re about to take off, you want to verify your oil pressure and temperature. And if you have limited visibility, it’s important to keep a close eye on your attitude indicator.”
In a way, the cockpit dials are like puzzle pieces. With a little experience, you can put them all together in your mind to see a complete picture of how the airplane is flying! (I’m still working on that picture… but loving every minute of it!)
I mention this because putting all the pieces of information together in a plane cockpit is a lot like arranging pieces of information about the market.
At first, it may take a little bit of practice to get used to it. But once you understand how everything works together, you can have a lot more confidence managing and growing your wealth!
The Best Investment Indicators
When it comes to navigating the market, there are plenty of instruments and indicators you can use.
But much piloting a plane, if you try to pay attention to too much information all at once, you can get overwhelmed. Too much information, or paying attention to the wrong information, can actually lead you to make risky decisions that can put your investments in danger.
Here at The Daily Edge, we often show you key charts or graphs that tell you what is going on in the market. It’s my goal to not just show you what this information is telling you, but also to help you use the information to paint a more comprehensive picture that can help you invest smartly and grow your wealth.
Here are a few of my favorite indicators that help me make decisions in today’s environment.
#1: Consumer Confidence
About 70% of the U.S. economy is driven by consumer spending. So if Americans have good jobs, earn attractive wages, and spend that money on goods and services, our economy will grow!
I always pay close attention to any indicator that gives me a better understanding of how and where consumers are spending their money. This includes the monthly job reports, any data on how fast wages are growing, and perhaps most importantly the consumer confidence indicator.
For the last couple of years, consumer confidence has hovered at a very high level. This makes sense with the job market being strong, wages trending higher, and financial assets from stocks to real estate moving higher.
As long as consumers are feeling confident with their finances, spending will continue. And that should create more jobs, helping to keep this positive cycle in motion.
#2: Private Equity Dry Powder
When asking the question of which way the market will trade, it’s important to know who the big buyers or sellers will be and which way their orders will drive the market.
Private equity investors have become big players in international financial markets because of how much money they control. These investment firms manage money for the wealthiest of clients including affluent individuals, as well as big endowments, pensions and other retirement plans.
Today, these giant investment firms have a record $2.4 trillion in “dry powder” — or cash — available to invest.
All of this cash is just waiting for a chance to be put to use. Which means that any meaningful pullback in the market will be met with trillions of dollars ready to buy stocks at a discount.
That gives me a lot of confidence that the market will continue to hold up for months to come, and any pullback will likely be small and short-lived.
#3: Company Earnings are the Key
When we invest in any individual stock, we’re buying a piece of that company.
And the value of the piece you buy is ultimately tied to the earnings that your company will generate. So it’s important to know what your company earns right now, and how those earnings are expected to change in the future.
Fortunately, information on every publicly traded company is free and widely available on different financial websites.
For instance, below is a screenshot from Yahoo Finance which shows what Wall Street analysts expect Apple Inc. (AAPL) to earn during various periods in the future.
One of the things I like to watch for is revisions in Wall Street expectations. Because when analysts start to upgrade their expectations for a company’s earnings, that’s usually a good sign that the stock is going to trade higher.
So today, we’ve covered three quick “instruments” that you can use to help guide your retirement investments.
Of course, there are plenty of other pieces of information that we look at. And we’ll continue to bring those to you here at The Daily Edge, highlighting the most important data and the best opportunities for you to take advantage of.
The key thing to remember is that it doesn’t have to be overwhelming.
Instead of trying to pay attention to everything at once, focus your attention on the most important indicators for each market scenario. And stick with The Daily Edge for guidance on which opportunities make the most sense for today’s market.
Here’s to growing and protecting your wealth!