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Consumed v Informed

As discussed often in these posts investing is hard but essential.  It follows the paradox of trying to be informed without being consumed.  Informed investors focus on the things they can control.   Things like Fees, how much they contribute, length of their holding period and how often they make changes.  Consumed investors make the mistake of thinking the stock market future can be known and tamed for one’s own ends.   

When I began investing like most of us in my 20’s I read magazines like Fortune or Money Magazine and thought hey just buy low and sell high.  It’s as easy as that.  As I have gained experience mostly by reading the writings and listening to the words of the giants in our industry who without exception say the market can’t be timed with consistency, I’ve changed my opinion.  If they can’t why should we think we can?   

The end of 2018 tested our conviction that markets over the long-term benefit investors.  As of this writing the market has largely rebounded.  As a practitioner it's great to see these events play out and the members of the RIM Family stay disciplined.  Part of the review process this 1st quarter was to show account balances as of 12/24/2018 (the market bottom in 2018) and then show how they have rebounded since.  We should do our best to remember this experience for future events as they are sure to happen.   

This week Michael Batnick, Director of Research at Ritholtz Wealth Management put together a list of incredible Stock Market Facts.  I’ve listed a few of them below.   

  • Only 47.7% of stocks generated a life-time return that match one-month treasury bills. 
    The reason why so many mutual funds fail to beat the market is because so many stocks fail to beat the market. 

  • Gold and the Dow were both 800 in 1980. Today Gold is $1,300/ounce, the Dow is near 26k. 

  • U.S. one-month treasury bills went 68 years with a negative real return. 
    What’s safe in the short-run can be risky in the long-run. 

  • Since 1916, the Dow has made new all-time highs less than 5% of all days, but over that time it’s up 25,568%. 
    95% of the time you’re underwater.  

The less you look the better off you’ll be. 

The first point illustrates why it is so difficult to be a stock picker and why it's so important to be diversified.  The third point illustrates why what may feel safe is over time riskier.  The final point explains the end of 2018.     

Have a great weekend and Take the Long View! 


Source:  https://theirrelevantinvestor.com/2019/03/13/the-twenty-craziest-investing-facts-ever/ 


There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment.  No investment strategy, such as asset allocation, can guarantee a profit or protect against loss in periods of declining values.   

Investing involves risk including the potential loss of principal.  No investment strategy can guarantee a profit or protect against loss in periods of declining values.  Past performance is not guarantee of future results.  Please not that individual situations can vary.  Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.   

Past performance cannot guarantee future results.  Current performance may be lower or higher.   

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