We continue to experience civil unrest here in the United States. The intolerances displayed are hateful. During these turbulent times there will be ‘experts’ telling you what is the best place for your money.
It could be gold, annuities, real estate. bitcoin or even a pyramid scheme…….. Whenever there is fear in the air someone has the answer for your investments. This is a very dangerous time to be speculating.
If an investment strategy is on the cover of every magazine, and all of your friends and associates are doing it, it’s reckless to follow suit. Only hot, sexy, and speculative techniques make the cover. Don’t follow your friends!
Remember the most successful businesses have one strategy and they stick to it. Such as McDonald’s, if you visit a McDonald’s anywhere in the country they are all set up the same. They know there may be a better way to run a restaurant but their systems works.
Warren Buffet is another example, he has one way of investing and it has made him the most successful investor of our time. There are times when he losses more money than most but over the long term he wins. He does not fall for the latest fad.
U.S. stocks continue to outperform, well, all other asset classes. The large U.S. stock more specifically is the number one asset class.
Many clients are looking at their globally diversified portfolios and asking themselves. Why if the U.S. Large stock is doing so well is my portfolio lagging behind? If I just invested all my money in the S&P 500 I would be beating my portfolio.
Why am I paying my adviser/coach to earn a poorer performance than the S&P500?
As investors, we have very short memories. In the late 1990s U.S. Large Cap Growth stocks were outperforming all other asset classes. Four straight years this was the case.
Then the bursting of the tech stock bubble devastated the investors with concentrated portfolios in U.S. Large Cap Growth.
No one can consistently predict the future. They may get lucky, but that’s what it is Luck and not skill.
But right now, we are seeing the re-emergence of value and small equities. Whether it continue is anyone’s guess.
As an investor, you may be tempted to change your investment mix to accommodate current events. This is called market timing and it has been proven not to work. You may get lucky in the short term but you will eventually fail.
To succeed in investing for the long term you should own equities….globally diversify….rebalance. The key is to remain disciplined to this strategy.