While everyone else is running around worried about what the Federal Reserve did or didn’t say today, I have to bring some stuff to your attention…
Sometimes I have to pinch myself when I consider the folks I get to work with everyday. Especially compared to the old days. But even in an absolute sense, it’s almost miraculous – these people serve on my investment committee and we get to spend our days kicking ideas around, working on our portfolios, etc. I still can’t believe it.
Consider the two blog posts I link to below, one by Ritholtz Wealth Management‘s director of research and the other by our head of institutional asset management.
First, Michael Batnick dives into difference between historical returns, plotted on a chart, and actual investor returns.
The 1950s were a great time to be an investor. It was the only decade where stocks began at the lows and finished right near the highs. Furthermore, the total return on the S&P 500 was 486%, the strongest of any decade ever.
But when looking at historical returns, we fail to see what really matters, which of course are investor returns. It’s highly unlikely that they captured anywhere close to the 486% advance in the S&P 500.
Here are a few reasons why.
You’re definitely going to want to read about what happens next:
And then there’s this gem from Ben Carlson, a perfectly crystallized version of our investment philosophy – a philosophy that Ben lives and breathes every day as he goes about his work with our institutional customers, prospective clients and their mission-critical objectives. Ben lays out ten core beliefs he has about investing that, although they should be obvious, are very far away from the mainstream for pensions, endowments and the like. Many consultants hate this stuff because it’s so elemental and true – and so career-threatening. That’s how you know he’s right.
Here’s one of the ten, before I send you over…
7. I believe that individuals spend far too much time studying billionaire fund managers and not enough time studying normal people who have successfully retired.
Billionaires are way more interesting, even if the actions being taken by George Soros, for example, have no bearing on the general public.
Anyway, just wanted to share.
Talk to us about bringing realism and rationality to your investment plan today. It’s literally all we do.