Change your life by
managing your money better.
Subscribe to our free weekly newsletter by entering your email address below.
Subscribe to our free weekly newsletter by entering your email address below.
The last two weeks have been big losing days for stock investments. Since May, Morgan Stanley’s EAFE Index, which tracks European, Asian, and other international stocks is down 12% while the Emerging Markets Index is down 20% and the S&P is down 6%. Also, around nine billion dollars was transferred from stocks to money markets last week.
Investment Lemmings-Don’t Become One!
A lemming in the animal kingdom is a rodent known for periodic mass migrations that occasionally end in drowning. An investment lemming is a person who follows the crowd into an investment move that will inevitably end in disaster.
The Wisdom of a Buy and Hold Investment Approach
From 1985-2004 the average stock fund delivered an annual return of 12.3% while the average stock fund investor earned only 3.7% annually per year according to the Quantitative Analysis of Investor Behavior by Dalbar, Inc. and Lipper published in July 2005.
How About Market Timing?
*April of 1984 through December of 2002 showed that the S&P 500 produced an average annual return of 9.66% (15%/year if we would have cut the numbers off at May 2000.)
*If you missed the 40 best days in the Market your 9.66% rate of return drops to .47%. However, this line of thought is flawed because in the majority of cases, large percentage gainers were no more than 90 trading days away from a large percentage loser, sometimes before and sometimes after.
*If you miss the 40 worst days in the market your return increased from 9.66% to 21.46%. However, this analysis is just as flawed as the first one, since it assumes that the investor is smart enough to be out of the market on all the worst days, but in the market in all of the best days.
*If you missed the 40 best and 40 worst days, your return increases from 9.66% to 11.31%, so timing the market will only provide you with an additional 1.65%/year if you do everything perfectly. As I have already told you, the research shows that the average investor only earns 3.7% vs. the S&P 500’s 12.3% (1985-2004).
Is the Market Consistent or Are We in Unique Times?
*Fifty three percent of the time the market is up, vs forty seven percent of the time spent down.
Subscribe on these platforms or wherever you listen to podcasts for new episodes every Friday, live streams every Tuesday at 10am CT, and new highlight clips throughout the week.
Financial Order of Operations®: Maximize Your Army of Dollar Bills!
Here are the 9 steps you’ve been waiting for Building wealth is simple when you know what to do and…
View Resource
Can This Annuity DESTROY Your Retirement?
Read MoreThe IRS Just Changed the Rules About 401(k)s (What You Need to Know)
Read MoreWealth Multiplier Revealed: The Magic of Compound Interest!
Read More
How about more sense and more money?
Check for blindspots and shift into the financial fast-lane. Join a community of like minded Financial Mutants as we accelerate our wealth building process and have fun while doing it.
It's like finding some change in the couch cushions.
Watch or listen every week to learn and apply financial strategies to grow your wealth and live your best life.
Subscribe to our free weekly newsletter by entering your email address below.
