GameStop + memes = tulips (and Sirens)
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The coronavirus is still very much with us, as is much of the economic dislocation occasioned by the resulting lockdowns. Granted, we are evidently closing in rapidly on a vaccine—indeed, a number of vaccines. But it may be quite some time yet before most of us will get access to a vaccine, and frustration may abound. Moreover, in the coming weeks we will have to go through a hyperpartisan presidential election, with a variety of voting issues we’ve never had to deal with before.
So before we’re further engulfed by these multiple unknowns, we want to take a moment to review what we as investors should have learned — or relearned — since the onset of the great market panic that began in February/March. And that ended when the S&P 500 Index regained its pre-crisis highs in mid-August.
The lessons, it seems to me, are:
A word now — really just a repetition of what we’ve said to you before — about the election. Simply stated: it’s unwise in the extreme to exit the quality equity investments you’ve been accumulating for your most cherished lifetime financial goals because of the uncertainties surrounding the election.
Aside from the self-inflicted wound of incurring capital gains taxes, your chances of getting out and then back in advantageously are historically very poor, nor can we possibly be helpful to you in attempting to do so. As we have done all year — and as we do every election year — we urge you to just stay the course.
As always, we’re here to talk any and all of these issues through with you.
Thank you, as always, for your support and your engagement. It is a privilege to know you.
Everyone wants to know how to earn the most money with their investments. We all want that, right? Well, the answer is so simple you can scribble it on a cocktail napkin. We made a short video to share that sketch with you and to give you the answer. But be warned! There’s a paradoxical catch — “simple” doesn’t necessary mean “easy.”
Transcript:
Everyone wants to know how to earn the most money with their investments. We all want that, right? Well, the answer — The Investment Answer — is so simple you can scribble it on a cocktail napkin. That’s exactly what my friend and New York Times columnist Carl Richards has done for us in this sketch.
These are the factors that drive portfolio returns in the real world. The big circle on the left are the heavy hitters in rank order of importance. While the tiny circle in the bottom right reflects what doesn’t work.
By far the most influence is wielded by your behavior as an investor. That’s #1 by a wide margin. Do you take the long view with your investments? Do you understand that short-term volatility is normal? And, do you appreciate that pullbacks are temporary and the uptrend is permanent? The second biggest driver of returns is the percentage of stocks in your portfolio. And then what kind of stocks? Small companies have outperformed large companies over the long haul. And, value companies — those priced at a discount relative to their intrinsic value — outperform growth companies over the long term.
What’s not part of the investment answer? What’s is not a path to investing success? Marketing timing, stock picking, CNBC, and your brother-in-law’s advice.
Our team of PhDs at NorthStar Capital Advisors created this data-driven and time-tested approach for carefully managing our clients’ money. It’s formed by observation, by academic research, and by our real-world experience of successful investing over the past 14+ years.
But knowing the answer doesn’t necessarily translate to the success that we all seek. Think about our health. We all know how to live a healthy life, right? Nutrition and exercise. There’s the answer — The Health Answer — But do we faithfully practice these day in and day out, year after year?
To quote Warren Buffet, one of the greatest investors of all time, “Investing is simple, but not easy.” There’s the crucial paradox. “Investing is simple, but not easy.”
We practice the principles of long-term investing that have most reliably yielded favorable long-term results. Those principles are: planning; a rational optimism based on experience, and finally — patience and discipline. If you have any questions about “the investment answer” or that paradox of simple but not easy? We would love to hear from you.
As always, thank you for watching, we appreciate the opportunity to support your financial success, and please be well.
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We’re not writing about cappuccinos, champagne, or bubble bath.
We’re talking stocks.
You may have noticed that the shortest bear market in history is over, and markets recently hit new record highs.
Will stocks keep going higher? Will they stay volatile?
Is another bear market around the corner?
Maybe. Maybe not.
As is pretty common in these situations, market strategists are split.
Some see a new bull market that reflects a recovering economy.1
Others see troubling signs of a bubble that could burst.2
What could push stocks higher?
What warning signs are flashing?
Bottom line, we can’t predict what comes next in the market and that’s okay. Why? Because it’s all short-term “noise.” History shows that all stock market declines are temporary interruptions in a perennial uptrend.
Since we no one can predict the future and no one can time the market, we’re focused on helping our clients stay fully invested which is the only sure way to capture the entirety of the market’s permanent advance. Those powerful portfolio returns over the long term are the reward for staying calm.
2020 has been the strangest year of our lives (probably yours, too), and it’s foolish to try to time markets right now — or any time for that matter. If you’re thinking about big moves or feeling anxious about what comes next, please reach out. We’ll talk through your ideas or concerns.
1https://www.cnbc.com/2020/09/08/goldman-sachs-10-reasons-the-bull-market-has-further-to-run.html
The 2020 election is around the corner, adding another layer of uncertainty to an already volatile market.
This could be one of the most divisive races we’ve seen. We can’t predict its outcome or what it could mean for the economy.
So how can we keep a level head and make informed decisions amid so much chaos?
We made a quick video discussing three things you need to know to help protect your investments in the face of the unknown.
Video Transcript:
This is the FOURTH presidential election that we’ve navigated in our 15 years of helping our clients reduce taxes, invest smarter, and live better.
And we’re here to help you stay level-headed — even in times of chaos. The 2020 election is coming up fast, and we’ve had worried folks ask us: Will it tank the market?
In this video, we’ll give you three things to keep in mind so you can plan for uncertainty.
2020 has been wild, to say the least. And the upcoming election could be one of the most divisive races we’ve ever seen. Add a pandemic, confusing market trends, and it’s no wonder people are worried.
But let’s trade panic for perspective. Here are three WAYS we can prepare for election uncertainty:
#1 — It’s normal for markets to be more volatile in election years. But remember, other factors are always at play, like business cycles, interest rates, corporate profits — and, of course, unpredictable events like the pandemic. So what can you do? Take a deep breath and focus on the post-election period. If you want, we can help you create a plan to pursue long-term success, no matter who wins in November.
#2 — Markets don’t like uncertainty, and they don’t like surprises. So we can expect things to be a bit bumpy in the short term, especially in the weeks before and after the vote.
#3 — Regardless of who wins, the government will be focusing on the coronavirus and the country’s economic recovery. We don’t know what this will look like or how quickly things will happen. With some preparation now, we can help you create a financial plan that accounts for this uncertainty — and you can be less worried about your portfolio.
Listen, we don’t have a crystal ball. But we do have the advantage of knowing what’s happened in the past, and being able to prepare for what could happen in the future. While the past can’t predict the future, we can look to it for powerful perspective.
If you have questions about how the 2020 election might affect your portfolio or you’d like to talk one-on-one, please reach out.
As always — we thank you for your support, we appreciate your engagmement, and please be well.
“The investor’s chief problem – and even his worst enemy – is likely to be himself.” — Benjamin Graham
If you’re looking at headlines or feeling the pressure of the downturn, it’s easy to think you’re not in control.
And it’s true—you have limited control over external circumstances (like the pandemic). But you have complete control over yourself and your behavior.
Times like these are when it’s most important to dig deep, root out bad habits, and come out on the other side mentally stronger than before.
We made a short video showing you exactly how you can overcome the hardwired biases that can cheat you, including the huge mental trap that even Warren Buffett has to fight.
(You’ll have to watch the video to find out what it is!)
Over the past several weeks, the stock market has experienced both the fastest crash and the most robust bounce ever seen. Right now, while things are relatively calm, I want to underscore the following points that are profoundly important to your investing success.
I hope sharing our enduring principles helps both steady you in the present and focuses you on your long-term success. As always, if you have any questions don’t hesitate to give me a call.
When the world goes as haywire as it’s done lately, you may have occasion to question your investment strategy — and even your overall financial planning. If so, you may wish you could get an objective second opinion you can trust, from a friend. I hope you’ll know me to be that friend.
Wishing great success,
Chris
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Chris Mullis, Ph.D. Founding Partner ![]() Wealth Management. Since 2006 AskNorthStar.com |