Predicting The Future
PREDICTING THE FUTURE
Do you believe the stock market is going to average double-digit returns anytime soon? Do you worry about your money going backward in a Bear market? Do you worry about the next 9/11 or next war that will erupt around the world that will affect oil prices and the stock markets in a negative manner? Can you predict when the next downturn or upswing in the market will come or when the next hurricane or earthquake will come? Can you predict who will be elected as our next president and Congress and what financial policies they will implement which will have far-reaching effects on our economy?
We are poking a little bit of fun at all the variables of investing to make a point. If we are honest with ourselves, we will admit that none of us knows which individual stocks or mutual funds will be going up and down or when the next big national or world issue will come up that will affect our actively traded money.
20-year returns
- Did you know that the S&P 500 stock index had returns of 7.81% from 1992-2012?*
- Did you know that the average mutual fund investor averaged only a 3.49% return from 1992-2012?*
(*DALBAR study)
Buying high and selling low
When you read the next few paragraphs, you will understand the above statistics; and many of you will be nodding your heads in agreement with a painful smile appearing on your face.
It is our opinion that over time the stock market will go up but that we don’t really know which stocks will be the big winners.
For example, won’t you agree that you and your financial advisor would have purchased Wal-Mart—one of the largest companies in the world, consistent earner, paid dividends in July of 2003 instead of K-Mart—just emerging from bankruptcy, big marketing tie to Martha Stewart (who was looking at jail time), no anticipated dividends. How would you have done? Wal-Mart went from $56.08 to $51.76 and K-Mart went from $24.20 to $76.80. Data from Yahoo finance.
Why did the average investor from 1992-2012 have returns of 3.49% when the average mutual fund returned 7.81%? Because we are professionals at buying high and selling low.
A better way?
*Any guarantees mentioned are backed by the financial strength and claims-paying ability of the issuing insurance company and may be subject to caps, restrictions, fees, and surrender charges as described in the annuity contract.
No downside risk and tax-free growth and withdrawals
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