How to invest in the “future you”
First—If you missed my first Skype TV interview in history, be sure to see my hit on Spicer & Co.
Q1
The first quarter of 2020 was the worst first quarter in Dow history. That’s 125 years. There was only one stock in the Dow that finished positive…Microsoft. Up 0.01%, just a shade higher than John “Bluto” Blutarsky’s GPA in Animal House.
The S&P 500 was down 14% in March.
Going back to the Great Depression, only October 2008, August 1998, and October 1987 were worse than March 2020.
But a full year after each of those three months…the S&P 500 was up 7%, 38% and 11%, respectively.
But, that by itself doesn’t mean anything.
Historically, it’s not uncommon to see a reversal back down. In fact, ‘01/’02 saw three +20% rallies before heading down to a 51% loss from the all-time high. And ‘80/’09 saw a 27% rally before settling into a 56% loss from the all-time high.
I can hear it now, “Dave, WTF! You are saying out of one side of your mouth that markets rebound after sell-offs and then out of the other side you are saying that the market may go back down again even after this little rally.”
Yes.
Both. Either. Or.
No one knows. Everyone thinks they have an idea and there’s no shortage of predictions. Everyone is looking for the bottom, the “all-clear” sign that they can relax and possibly even get back into the market.
People trying that will likely fall into one of two camps–One camp will likely invest and instantly regret how much they invested because the market goes down. The other camp will likely invest and instantly regret not putting more to work because the market went up.
I’ll make up a term for it: Guesser’s Remorse.
Here’s a better idea–Stop guessing.
Stop trying to guess the bottom and instead assess the OPPORTUNITY. Good companies struggling through an event are trading at 20-30% discounts from Feb. Same with broad-based ETFs for those inclined to index, who want to avoid picking individual securities or who are invested in the government’s Thrift Savings Plan.
Why am I so confident in that advice? See below. Markets recover over time and they still look oversold to me. (@ycharts & @bespokeinvest)
There is a lot of criticism getting thrown at folks (like me) who are giving some version of the “do nothing” advice. And while I’m guilty of giving a version of the “Do nothing” advice, mine is more along the lines of “Don’t do anything stupid.”
I think there is a big difference between the two, and for people who don’t need to raise capital now, trying to adjust long-term portfolios now based on gut feeling, pundits on TV, or a desire to shift now to a portfolio they wish they had 3 months ago violates my advice.
That may not resonate with everyone, but I don’t care. I’m not trying to resonate with everyone. I’m just trying to resonate with someone. If that’s you and you need help, reach out.
Assess this as an opportunity to invest in the “future you” who needs this money ten years from now.
Keep looking forward,
Dave
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Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Wealth Management), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.
All indexes referenced are unmanaged and cannot be invested into directly. The economic forecasts set forth may not develop as predicted. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument Wealth Management. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Monument Wealth Management is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.
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David B. Armstrong, CFA
President & Co-Founder
Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....
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