While talking with many investors, both current and potential clients, I have repeatedly heard that stocks are no longer a good investment nor is it the best investment right now. The current volatility will remain, perhaps permanently, making stock ownership far too uncomfortable.
Many of the financial publications are predicting poor returns going forward. Perhaps, they say, this may lead to the ‘death of equities’.
Each time these publications have a solution for your investment dollars.
Perhaps, it is gold or treasury bills or private equity or hedge funds or real estate or cash or the next great money manager or a trading strategy or on and on. Even more prevalent is putting your investment dollars in an insurance product.
These products promise a ‘guaranteed’ return. You are promised ‘you will never lose money’. Keep in mind if equities do ‘die’ insurance companies will soon follow. Insurance companies make money at your expense.
After some research I found an article in BusinessWeek from August 1979 titled the “Death of Equities”. Below are a few excerpts from this article. This article seems eerily similar to the current financial media.
“This ‘death of equity’ can no longer be seen as something a stock market rally—however strong—will check. It has persisted for more than ten years through market rallies, business cycles, recession, recoveries, and booms.”
“Individuals who are not gobbling up hard assets are flocking to money market funds to nail down high rates, or into municipal bonds to escape heavy taxes on inflated incomes.”
“Few corporations can find buyers for their stocks, forcing them to add debt to a point where balance sheets seem permanently out of whack.”
We have entered a new financial age. The old rules no longer apply.” —Quotation attributed to Alan B. Coleman, dean of business school, Southern Methodist University
“Today, the old attitude of buying solid stocks as a cornerstone for one’s life savings and retirement has simply disappeared.”
Many investors might look at this article and determine that stock investing was no longer for them. Keep in mind, 1982 marked the beginning of the greatest bull market in U.S. history.
Will this be repeated? I have no idea. However, I do know that NO ONE can consistently predict the future.
The financial media continually makes new predictions, hoping the readers have short memories.
I believe that if you develop a globally diversified portfolio and remain disciplined to this strategy for the long term you will succeed.
Those that profess their ability to time the market or pick the right stocks are fooling you and themselves. Keep in mind that there are two groups regarding predicting market/stock movements, those who don’t know where the market is going and those who don’t know they don’t know where the market is going.
To succeed in investing for the long term you need to own equities….globally diversify….rebalance.