Powerful Financial Advice from Thought Leaders

While no one has any way of knowing the future, everyone could use some financial advice from the smartest people in the business to help them make investment decisions.

The stock market has been climbing steadily for years, but now that it has consistently hit new record highs investors are left wondering where it will go from here. Is there anything left in the gas tank to push the mark higher? Or are stocks about to hit a peak and start falling again?

While no one has any way of knowing the future, everyone could use some financial advice from the smartest people in the business. The majority of the following quotes appeared in The Wall Street Journal (except where noted otherwise).

• “The key is to harness the most powerful force in the financial universe: inertia. The only thing that people hate more than making decisions is changing them.” — Jason Zweig in his March 30 column “How to Save More For Retirement Without Really Trying.”

So set up a plan to automatically put money into your IRA or 401(k). Pay yourself first, and you will never regret it.

• “When everyone is panicking and mistakenly selling equities as they did during the 2008 meltdown, don't do something — just stand there — or even better, rebalance by selling bonds and purchasing more equities.” — Burton Malkiel, senior economist at Princeton University.

• “Great track records tend not to persist, but high expenses do. Don't pay high expenses to chase performance.” — Burton Malkiel, senior economist at Princeton University.

Expenses are one of the few things that we can control in our financial lives. The others are spending and saving. Returns are not in our control.

• “A portfolio of low-cost index funds has a significantly greater chance to outperform a comparable portfolio of all active funds.” — Rick Ferri, founder of Portfolio Solutions.

Read this one again. And then again.

• “There are two things that any financial professional will tell you with confidence:

1. Past performance is no indication of future performance

2. Hey, look at how good my track record is!”

— Scott Adams, creator of the Dilbert comic strip. Humor is funny sometimes because it reveals the truth.

• “We don't know as much as we think we do.” — Tom Brakke, CFA, (and many others).

So don't think the recent record high stock market level means that you are any smarter than you thought you were dumb in the 2008-2009 market crash

• “Investors should ignore their emotions.” — George Sauter, senior consultant to Vanguard, (and many others).

We should tape to our bathroom mirrors and recite it every morning.

• “Rebalancing does three big things for you. First … rebalancing gives you far superior returns. Second, rebalancing gives you an action plan for coping both with bear markets and bubbles. Third, rebalancing prompts you to buy fear and sell greed — a strategy long advocated by investing greats such as Warren Buffet.” — Charles Rotblut, vice president with the American Association of Individual Investors.

• “Inappropriate conduct by your children can expose the entire family to financial risk. Addressing this issue proactively can preserve family wealth for generations to come.” — Peter Piotrowski, senior vice president, AIG, in a column on Worth.com.

The news is full of adolescent catastrophes that can bankrupt parents who once regarded them as “unthinkable” and therefore never planned for such events. So parents, please keep talking to your kids.

• It needs to be said over and over — do not respond to unsolicited pitches made to you that you did not ask for. Also under the repetition banner is to get three bids on major purchases or work to be done for you. As doctors, we know that homework always pays.

• Sometimes the best financial course is to “Just say no.” No explanation needed.

• The hardest and, for some, best financial advice of all: Give up the dream of getting something for nothing. Fantasies can be very, very expensive.