April 4, 2016
What makes a “market” is when buyers and sellers with different opinions finally agree on a price. It doesn’t matter if we’re discussing tomatoes, cars, houses or stocks. There are SO many different opinions about where the market is going, and this is precisely what makes it so much fun! Since the low made on February 11, 2016, stocks have staged a strong, unexpected rally, closing + 1.17% on the year. IMHO, Oil stocks have found a bottom, representing attractive dividend yields and long term opportunities.
IMHO
Speaking of opinions, just look at the titles from the books given to me from friends over the years. Each friend, while handing me the book said something to the effect; “I know you’re investing money for people, so you should know what’s going on, and consider selling everything”. It’s their opinion that I should put all client assets; your assets into money market funds and beg you to stock up on guns. In every instance, the stock market is substantially higher since it was published. I’ve included the rate of return of the Standard & Poor 500; NOT including dividends for the period of when a book debuted to the time of this writing.
(Publishing dates from Amazon.com)
Check this out.
Boom Bustology
Published March 8, 2011
S&P 500 up +56.07%
The Dollar Crisis
Published June 22, 2005
S&P 500 up +70.21%.
US Dollar Index +6.79%
A Bull In China
Published December 30, 2008
S&P 500 up + 132.57%
Dow Jones China 88 +54.98%
Contrary Investing for the 90s
Published January 1, 1990
S&P 500 up +509.69%
The Black Swan
Published April 17,2006
S&P 500 up +60.83%
The Great Depression Ahead
Published January 6, 2009
S&P 500 up + 121.38%
In case you were wondering, I’ve donated these books to the local public library. With respect to the opinion of these well meaning investment specialists, and I mean that sincerely, I still remain convinced that 100% of the near‐tripling of equity values since 2008 is directly attributable to the very attributes and forces that have been driving equity prices higher since the dawn of this Nation:
Life, Liberty and the Pursuit of Happiness drive innovation, growth of company earnings, cash flow, dividends and the magnanimous desire to increase the standard of living of all mankind. It’s the manifestation of an unleashed human spirit and an ability to monetize the ingenuity of man for the betterment of self and the world. I fully expect these trends to continue for the remainder of this Millennium.
The stock market is not a conspiracy to rip us off. It’s a wealth building machine which can provide us with a remarkable standard of living in retirement as long as we (or the Government) doesn’t stand in its way.
How We’ll Know the Economic Expansion is Near the End of a Normal Cycle
I’m not so naive as to believe those temporary but severe market declines don’t damage our emotions or bruise our retirement plans. Expansions and contractions are part of the game which give us attractive returns over time. In my experience, great advances in equity values haven’t usually ended while the public’s default setting was terror.
The most significant market tops I’ve seen‐in early 1987, 2000, and 2006‐07,took place at the height of speculative manias, where the fear most investors exhibited was that everybody else might be making more money than they were. This is a conversation you may want to have with your financial advisor, whose greatest value to you is not the timing the market’s peaks and troughs‐which no one can consistently do‐but in coaching and holding your hand so you don’t overreact to them.
This Is Where We Earn Our Fee
Portfolio gains have not been easy to attain since 2013 as seen on the benchmark grid below (1), but the market is still yielding almost 3 times more than the 10 year US Treasury notes, with banks in the strongest financial position in over 10 years.
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Warm Regards,
Bill
(1) Prices from Yahoo Finance
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