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Welcome!
to my "Founders Notes", a weekly newsletter filled with tips and updates from me and the latest thoughts from members of the ARD team.
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John R. Deitrick, CFP®
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HAS THE EASY MONEY BEEN MADE?
SYNOPSIS
- Articles online question if the "easy money" has been made in the stock market
- These stories have been around for several years and provide little value
- There is nothing easy about investing in stocks
An investor contacted me this week concerned about an article she had seen online that interviewed a prominent investor who believes that the "easy money has been made" in the stock market. Intrigued by such a claim, I performed a google search on this exact phrase, and the following article appeared at the top of the list.
This sort of fearmongering is incredibly frustrating because it works so well. Any article with a headline that claims a billionaire investor is bearish will most certainly tempt readers to click and learn more from someone who is really good at making money.
Out of morbid curiosity, I spent some time analyzing the rest of the search results and noticed an interesting pattern. A nearly identical article appeared each year going back to 2013 (a year when the S&P 500 returned more than 30%). I just had to know how the S&P 500 performed since these warnings were issued, so I constructed the table below:
Starting at the bottom of the table, had investors run to cash on December 10, 2013, they would have likely missed out on a 70%+ return in just over four years. Had they sold on September 20, 2015, sitting out on the 51%+ rise in the S&P 500 in only 29 months would be even more painful.
Simply put, even the best investors are wrong more times than right, so warnings like these should always be taken with a grain of salt.
IMPLICATIONS FOR INVESTORS
Stories on "easy money" in stocks have been around for several years, and they have always made my blood boil for three reasons.
First, these articles that talk about easy money always seem to do so in hindsight. As in, it has already happened rather than it is going to happen. I even googled to see if there were any articles titled, "The easy money is about to be made," and unsurprisingly they were few and far between.
Second, I question the true intentions of those quoted because there is a tendency for them to "talk their own book." Meaning, those who predict stock market weakness are frequently positioned to profit if a crash were to happen.
There are also those pundits who are constantly bearish and make a living off of a broken clock being right twice a day. Perma-bears carry no weight with me unless they can show me a time in the past where they made a bullish call and was ultimately correct. Only then can I consider them to be impartial.
Third and most important, there is nothing "easy" about investing in stocks. It has never been easy, nor will it ever become easy in the future. If it was easy, then everyone would be a billionaire. Building wealth requires a tremendous amount of patience, discipline, education, and experience, and none of these are easy to acquire.
THE BOTTOM LINE
is that stories like these and the attention they receive will most certainly persist for years to come, but a quick performance check and some intuition is all that is needed to challenge their efficacy.
This material is for informational purposes only and sets forth the views and opinions of our investment managers as of this date. The comments, opinions and estimates are based on or derived from publicly available information from sources that we believe to be reliable. This commentary is not intended as investment advice or an investment recommendation nor should it be construed as a solicitation to buy or sell securities. All indexes are unmanaged and an individual cannot invest directly in an index. Index returns do not include fees or expenses. Past performance is no indication of future performance. The Standard & Poor's 500, often abbreviated as the S&P 500, or just the S&P, is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ.
Investment advisory services offered through Global Financial Private Capital, LLC. Securities offered through GF Investment Services, LLC. Member FINRA/SIPC. 501 North Cattlemen Road, Ste. 106, Sarasota, FL 34232 417216
This Thought of The Week has been prepared by and for Global Financial Private Capital, LLC ("GFPC"). GFPC owns all copyright rights in and to this and each of its Thought For The Week articles. It is impermissible to copy or redistribute GFPC's Thought For The Week articles without our prior approval.
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I hope you find this information adds value. If you would like to talk to John regarding these, or any other financial concerns, please feel free to call us at (614) 602-6506 and we will be happy to schedule a visit.
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Make it a Great Week!
Enjoy His gift of today!
Investment advisory services offered through Global Financial Private Capital, LLC, an SEC Registered Investment Adviser. SEC registration does not imply any level of skill or training. Past performance is not indicative of future results. This commentary is not intended as investment advice or an investment recommendation it is solely the opinion of our investment managers at the time of writing. Nothing in this commentary should be considered as a solicitation to buy or sell securities. Insurance and Annuity product guarantees are subject to the claims-paying ability of the issuing company, and are not offered through Global Financial Private Capital.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and the federally registered CFP (with flame design) in the US., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
AssetLock® is tracking software used to monitor the performance of a client's portfolio, and to predetermine the amount of downside the client is willing to tolerate. It is NOT an actual stop order and will NOT automatically sell the individual securities in the portfolio. Therefore, the AssetLock® value is a reference point to encourage a conversation between the advisor/firm and the client to determine if the client's portfolio should remain unchanged, reset the AssetLock® percentage by reallocating to a different risk profile, liquidate part or all of their portfolio or opt out of AssetLock®.
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John R. Deitrick
CFP®
Advanced Retirement Design LLC.
7263 Sawmill Rd.
Suite 150
Dublin, OH 43016
Office: 614.602.6506
Fax: 614.259.6094
Email: jdeitrick@advancedretirementdesign.com
advancedretirementdesign.com
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