3 Things 2-28

02/28/2022

Although MAS is a financial services company, not everything published herein will be about numbers or investing. But no matter the topic, we hope for three things: 1) That you find the time you spend engaged worthwhile. 2) That you’ll reach out to us for help in any of our areas of expertise if something we discuss creates an urging in you to do so. 3) That you’ll share this with somebody new each time you read it.

Thing One

Timing Isn’t Everything, Staying The Course Is

When the stock market goes down it means people and institutions are selling out of their positions. Such has been the case on many days during the last few months. The experts have categorized much of this activity as panic selling, which is generally based on some extraordinary news item. The current headline grabber and selloff instigator is the Russia/Ukraine war. Investors have not liked most of what they’ve read, seen, and heard on the topic and, since they have a long history of reacting negatively to predictions of WWIII and the end of the world, what’s happening to stock prices makes sense.

Those who sell on the negative news often feel good about “getting out” early as they watch the market fall further, but there is data that says that might not be the best approach. In fact, one study by Bank of America pointed out that investors who get out have a tendency to stay out too long and miss the best days. The study does allow that they can still do okay with their timing approach though. It even goes to the extreme to point this out by showing that since 1930, an investor who missed the 10 best days of every decade would still have had a return of 28%. Not bad, right? Not at all until compared with the return of an investor who resisted the urge to sell and stayed in from 1930 until the present day, with all the recessions, wars, and crises - financial and otherwise. His return over that same period would’ve been 17,215%. That is not a typo.

Get invested and stay invested. If you need help or know people who need help, let us know.

Thing Two

Beware the Get-Rich-Quick Schemes

This is the companion piece to the item above and it is inspired by a posting we recently saw on Facebook. Someone had posted to their page the table below with the following message attached:

“If you have your money just sitting in a savings account then you are not taking advantage of other ways to invest wisely. DM [direct message] me.”

While we completely agree with the sentiment that you may not be taking advantage of the other ways to invest if you have all your money in a savings account, we take issue with the suggestion that turning $1,000 into $13,290 over twelve months is something that can be done by just sending a direct message to a knowledgeable friend. There are no investments we know of that guarantee a 1% daily return and a 12x return on your initial investment over twelve months. Achieving huge gains from compound interest over long periods of time (like what we described in the first post) is one thing, but this is something entirely different.

We’ll keep our eyes peeled and let you know when we find a legal investment with a guaranteed return like that, but until then, even if you’re not working with people like us, we suggest you stay away from people like this.

Thing Three

Just A Thought

"Never bet on the end of the world, It only happens once." - Art Cashin