3 Things 6-6
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.
The Chart 'Don't' Lie
As we’ve said on more than one occasion when talking about the prudence of long-term investing in stocks, the market generally goes up – no matter who’s in the oval office or the congress. In fact, the S&P 500 has gone up in 31 of the last 41 years, as the chart below indicates. But it does go down too. And when it has gone down, intra-year, over the last 41 years, on average, it has gone down at least 14.3%. That’s not a warning it’s a fact. You should plan on the market going down big sometimes. But you should also plan on being in it (invested in good stocks or sensible stock funds) for the long term. Trying to time the market for short-term gain is a losing proposition. One of the best analogies likens that practice to standing in front of a steam roller picking up nickels. You don't have to be a psychic to foresee how that ends. It's better to stay invested. But if the thought of knowing that the value of your investment portfolio will go down - and then seeing it do down - from time to time makes you nervous, you could always keep a predetermined amount of cash on the sidelines to take advantage of the lower prices available to you when the market drops. Let us know if you'd like our help sorting that through.
Thing Two Stocks Or Bonds For The Long Term? That's the question. Here's some food for thought: The value of bonds will decline as interest rates rise. And over time interest rates will likely rise. The federal reserve has told us so. On the other hand, owning stocks makes sense in all kinds of 'weather,' rain, or shine. That said, it's best to buy when it's raining. It's less expensive that way. The value of stocks will increase as earnings rise over time. And as earnings rise, dividends will be increased as well, increasing the total return. So, unless a company is going broke, a long-term investment in that company's stock will outperform an investment in its bonds every time.
Thing Three Just A Thought “It's not because things are difficult that we dare not venture. It's because we dare not venture that things are difficult" - Lucius Annaeus Seneca