Will You Be in the Investment Markets Before the Next "Tipping Point?"
As I write this at the end of July, 2009, the D.
J.
I.
A.
is having yet another triple digit gain day.
It has surged from it's low, south of 6500 in March of 2009, to just north of 9k in late July.
It has done this in the fashion of strong gains, slight pullback, and strong gains again, a great "bull" sign if you're a student of markets and their movements like I am.
But as great as this is, my positions in emerging markets and real estate make the gains in the U.
S.
markets look low in comparison.
Baron Rothschild, a 19th century English robber baron and one of the richest men in the world once said "Buy when there's blood in the streets...
even if it's your own.
" Good advice, I guess there's a reason why he was one of the richest men in the world.
Unfortunately, in all of this, there is the flip side.
This group, still scared from the latest market crash, one of the worst since the Great Depression, is still shopping amongst the pathetically low interest bank and credit union interest rates for ALL, or far to big of a portion of their long term money.
Unless the market crashes tomorrow,almost all of my clients will finish July with a MONTHLY return of above 4%, and I can't even find one bank, online nor brick-and-mortar, that's offering a rate of 4% for FIVE YEARS.
I wish I could attribute this performance to being in that select group of experts who are "in the know," but as most people who read my investing articles know, I'm a fan of passive investing.
All I did was properly allocate my clients' investments among asset classes that are non-correlated to a greater or lesser degree, and kept the expenses low by investing in exchange traded funds (ETFs), the market did the rest on its own.
The aforementioned group of people, however, is the "mother's milk" of cockamamie schemes put on by infomercial marketers at 2 am.
They oscillate between fear and greed refusing to believe that the "Holy Grail" lies somewhere between those two extremes.
They believe that somewhere out there is someone, a guru, who can time the markets consistently, and they aim to find his/her secret, by trial and error, no matter how many of their hard earned dollars they hemorrhage in the process.
They never seem to grasp the idea the people who are successful in the world set a goal or strategy and hang as tough as nails until the objective is reached.
Sure, they get bumped and bruised a bit by life along the way.
But the world always seems to make room for people who know where they're going.
Several years ago, an author named Malcolm Gladwell wrote a book called "The Tipping Point.
" If you're a vociferous reader like myself, I HIGHLY recommend you add it to your list of "must reads," and no, I'm not being paid anything by the author or Amazon to plug the book, it's just an awesome and insightful read.
This is what is going to happen to the investment markets.
It will reach a "tipping point" where it will begin to shoot up towards it's previous highs in leaps and bounds, more than the recent significant gains, just like it did to the downside in '07.
My GUESS is that it will happen if the Dow shows strength around 10,000, as 10k is a big number in most people's minds.
The people who followed the advice of Baron Rothschild will be the ones who make most of the gains.
It has been proved countless times before that if you miss 60 days of just over 5000 trading days in a given bull market, the difference in your return is as much as 9% vs.
-.
03% as measured by the S&P 500.
Unfortunately, there will be people who will wait until after the tipping point, whose internal compass will switch from fear to greed, and they will end up with the table scraps thrown to them on the floor.
but by the same token, the "table scraps" will still blow away the piddly CD returns but they're tiny in comparison to those seated at the table that got to eat the prime rib! The best answer has always been and always will be, stay fully invested in a TRULY diversified portfolio (and that DOESN'T mean to have 5 different stock mutual funds all invested in the same securities, look inside many 401k plans, you'll see endless examples of this) based on your timeline and risk/volatility tolerance, and rebalance on a regular basis.
Keep the internal expenses low (ETFs are great for this) and utilize the jabber on the market only for short term play money (ALWAYS have a selling rule to get out of these gambles {hey that's what they are, educated guesses!}, and don't make them a major part of your portfolio.
) Finally, enjoy many of the investing artcles and TV shows for what they truly are, a journalist or actor doing his/her job reporting the news, and/or keeping people entertained.
The bull will rise again, he always comes after the bear leaves.
The question is, will his arrival see you as the early bird or the "johnny come lately," the differences in end results are vast, the time to decide is yesterday.
Choose wisely, and good luck.
J.
I.
A.
is having yet another triple digit gain day.
It has surged from it's low, south of 6500 in March of 2009, to just north of 9k in late July.
It has done this in the fashion of strong gains, slight pullback, and strong gains again, a great "bull" sign if you're a student of markets and their movements like I am.
But as great as this is, my positions in emerging markets and real estate make the gains in the U.
S.
markets look low in comparison.
Baron Rothschild, a 19th century English robber baron and one of the richest men in the world once said "Buy when there's blood in the streets...
even if it's your own.
" Good advice, I guess there's a reason why he was one of the richest men in the world.
Unfortunately, in all of this, there is the flip side.
This group, still scared from the latest market crash, one of the worst since the Great Depression, is still shopping amongst the pathetically low interest bank and credit union interest rates for ALL, or far to big of a portion of their long term money.
Unless the market crashes tomorrow,almost all of my clients will finish July with a MONTHLY return of above 4%, and I can't even find one bank, online nor brick-and-mortar, that's offering a rate of 4% for FIVE YEARS.
I wish I could attribute this performance to being in that select group of experts who are "in the know," but as most people who read my investing articles know, I'm a fan of passive investing.
All I did was properly allocate my clients' investments among asset classes that are non-correlated to a greater or lesser degree, and kept the expenses low by investing in exchange traded funds (ETFs), the market did the rest on its own.
The aforementioned group of people, however, is the "mother's milk" of cockamamie schemes put on by infomercial marketers at 2 am.
They oscillate between fear and greed refusing to believe that the "Holy Grail" lies somewhere between those two extremes.
They believe that somewhere out there is someone, a guru, who can time the markets consistently, and they aim to find his/her secret, by trial and error, no matter how many of their hard earned dollars they hemorrhage in the process.
They never seem to grasp the idea the people who are successful in the world set a goal or strategy and hang as tough as nails until the objective is reached.
Sure, they get bumped and bruised a bit by life along the way.
But the world always seems to make room for people who know where they're going.
Several years ago, an author named Malcolm Gladwell wrote a book called "The Tipping Point.
" If you're a vociferous reader like myself, I HIGHLY recommend you add it to your list of "must reads," and no, I'm not being paid anything by the author or Amazon to plug the book, it's just an awesome and insightful read.
This is what is going to happen to the investment markets.
It will reach a "tipping point" where it will begin to shoot up towards it's previous highs in leaps and bounds, more than the recent significant gains, just like it did to the downside in '07.
My GUESS is that it will happen if the Dow shows strength around 10,000, as 10k is a big number in most people's minds.
The people who followed the advice of Baron Rothschild will be the ones who make most of the gains.
It has been proved countless times before that if you miss 60 days of just over 5000 trading days in a given bull market, the difference in your return is as much as 9% vs.
-.
03% as measured by the S&P 500.
Unfortunately, there will be people who will wait until after the tipping point, whose internal compass will switch from fear to greed, and they will end up with the table scraps thrown to them on the floor.
but by the same token, the "table scraps" will still blow away the piddly CD returns but they're tiny in comparison to those seated at the table that got to eat the prime rib! The best answer has always been and always will be, stay fully invested in a TRULY diversified portfolio (and that DOESN'T mean to have 5 different stock mutual funds all invested in the same securities, look inside many 401k plans, you'll see endless examples of this) based on your timeline and risk/volatility tolerance, and rebalance on a regular basis.
Keep the internal expenses low (ETFs are great for this) and utilize the jabber on the market only for short term play money (ALWAYS have a selling rule to get out of these gambles {hey that's what they are, educated guesses!}, and don't make them a major part of your portfolio.
) Finally, enjoy many of the investing artcles and TV shows for what they truly are, a journalist or actor doing his/her job reporting the news, and/or keeping people entertained.
The bull will rise again, he always comes after the bear leaves.
The question is, will his arrival see you as the early bird or the "johnny come lately," the differences in end results are vast, the time to decide is yesterday.
Choose wisely, and good luck.
Source...