“Give ’em what they want”

One year ago this week, the S&P 500 touched an all-time record high of 2134.

Here’s what has happened to US stocks in the 12 months since:

The S&P 500 is down 4.62% with two drawdowns greater than 11%, followed by short, sharp comebacks that brought us back toward the highs, only to fail.

The Russell 2000 is now trading back at 2013 levels, with a drawdown of 13.48% over the last year.

The S&P MidCap 400 is down 7.69%.

The Dow Jones Industrials and Nasdaq 100 have fallen 5.2% and 4.6% respectively.

new high

A passive portfolio with exposure to these indices has been extremely popular with investors in the modern era. But it has not exactly been a slam dunk since the all-time highs one year ago.

This is why investing can be simple, but never easy.

The longer we go without advancing past the old high, the less likely it is that investors will be able to sit tight and deal with it. Investors will be in search of the next savior, the new “Jesus fund”. They will surely find something that seems to fit the bill – my guess is covered-call writing or something else I can’t even conceive of which produces above average returns in a flat market environment.

Sitting still isn’t easy when there doesn’t seem to be any money being made for a prolonged period of time. Investors forget that what usually works doesn’t work all the time. They’re obsessed with finding a strategy that’s working right now. I don’t care what it costs, anything but this. 

And when they find it, they convince themselves that it is invincible.

Advisors will attempt to use logic to appeal to their antsier clients. Unfortunately, logic doesn’t always win arguments.

Seth Godin explains:

Before we start laying out the logical argument for a course of action, it’s worth considering whether a logical argument is what’s needed.

It may be that the person you’re engaging with cares more about symbols, about tribal identity, about the status quo. They may be driven by fear or anger or jealousy. It might be that they just don’t care that much.

Sometimes we find ourselves in a discussion where the most coherent, actionable, rational argument wins.

Sometimes, but not often.

Many investors will demand that their advisors change what they’re doing. “It’s not working!” the squeakiest wheels will shout. Advisors will succumb and go looking for oil to quiet those squeaks. They will find snake oil and apply it liberally. This is the easy thing to do.

“Give ’em what they want,” is the paramount rule of salesmanship, not “make sure they understand what they need,” which is much harder to pull off.

Do you have an advisor or a salesperson taking your call? This distinction will make all the difference.

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. Saying No to the Validators commented on May 20

    […] When push comes to shove in a validator relationship, the customer is going to get their way. See Give ‘Em What They Want for more on […]

  2. Our House, Our Rules commented on May 10

    […] “‘Give ’em what they want,’ is the paramount rule of salesmanship, not ‘make sure they understand what they need,’ which is much harder to pull off.” […]

  3. diamond painting kits hobby lobby commented on Sep 18

    … [Trackback]

    […] There you can find 64020 additional Info to that Topic: thereformedbroker.com/2016/05/19/give-em-what-they-want-2/ […]

  4. Black Satin Pillowcase commented on Sep 27

    … [Trackback]

    […] Read More Information here to that Topic: thereformedbroker.com/2016/05/19/give-em-what-they-want-2/ […]

  5. bitcoin evolution es real commented on Sep 30

    … [Trackback]

    […] There you can find 28954 more Info to that Topic: thereformedbroker.com/2016/05/19/give-em-what-they-want-2/ […]

  6. regression testing meaning commented on Nov 28

    … [Trackback]

    […] Read More Info here to that Topic: thereformedbroker.com/2016/05/19/give-em-what-they-want-2/ […]

  7. replicas omega 2254 seamaster commented on Dec 30

    … [Trackback]

    […] Read More to that Topic: thereformedbroker.com/2016/05/19/give-em-what-they-want-2/ […]

  8. tangerine bank account sign in commented on Jan 16

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2016/05/19/give-em-what-they-want-2/ […]

  9. prediksi hk malam ini commented on Feb 01

    … [Trackback]

    […] Find More here to that Topic: thereformedbroker.com/2016/05/19/give-em-what-they-want-2/ […]