Negative advertising works. Just ask any political consultant. Consistency is also key. So, if you put the two together and find a consistently negative message, you may find lots of interest. How many times have you heard doomsday scenarios from people in the media recently? I routinely get an email forwarded from a client that says the sky is falling in the money world and occasionally the writer is correct. But, the majority of the time he is wrong.
These days I hear the following from clients or others that are worried:
- our government leadership is creating a huge deficit which will translate into another enormous plunge in the stock markets (the rungs on the ladder of logic vary based on the messenger);
- the dollar will continue to fall in value and gold is a wonderful investment. I heard it on TV;
- local businesses have been closing and people have been laid off so the stock market will crash;
- the market will crash again soon because “__________” (fill in the blank, I’ve heard it all).
It is understandable that people are afraid of the unknown and there are many possible terrible scenarios, but what happens when you miss the good times that the negativity professors never mention? If you decided to listen and put all your money on the sidelines from the beginning of March through yesterday, you would have missed a pretty large run-up (see a sample Wealth Planners’ aggressive account and disclosures below). No one knows the future but if you can absorb both the negative and positive talk without reacting in extremes, you will probably be better off in the long run and have a less stressful life. We will continue in our quest to find value and good people and to not overreact to negative or positive global news that may or may not affect the stock or bond markets.
DISCLOSURE:
Notes:
This data is furnished to you for informational purposes only. Although it is derived from information which we believe to be accurate we cannot guarantee its accuracy. Individual investor's results will vary. Past performance does not guarantee future results. Performance is depicted on a time-weighted average for the entire period and is net of our fees. Dividends are not guaranteed and will fluctuate. The inception date indicates the date of account or household initiation in the Portfolio Performance system. This date may not match the date the account was opened. Annualized refers to the annualized return from the inception date of the account, or the selected beginning date when using the date-to-date functionality.
Definitions:
Time-Weighted Return - The geometric (compounded) return measured on the basis of periodic market valuations of assets. An alternative to the dollar-weighted return measure, it abstracts from cash flows; however, in principle it requires valuations to be made on the occasion of each cash flow. Approximations to this measure can be obtained by prorating cash flows to successive valuation points or by computing internal rates of return between valuation points. If there are no interim cash flows, the time-weighted return, compounded annually determines the entire value of an investment. See also Dollar-Weighted Return. The portfolios on this report are being compared to secondary benchmarks for informational purposes only. These benchmarks may require adjustment to correlate with the assets held in the portfolio.
Lehman Aggregate Bond Composite Index - This index is a measure of the investment grade, fixed-rate, taxable bond market of roughly 6,000 SEC-registered securities with intermediate maturities averaging approximately 10 years. The index includes bonds from the Treasury, Government-Related, Corporate, MBS, ABS, and CMBS sectors.
S&P 500 Index - This index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. It consists of 400 industrial, 40 utility, 20 transportation, and 40 financial companies listed on U.S. market exchanges. This index does not include the effects of reinvested dividends.
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