Big News Week Starting Tomorrow
The Hold Part of Buy & Hold is Key
Aesop’s Fables tells of a dog who was given a bone by the local butcher. Full of joy, the dog went to look for a secluded place to eat the bone. On his way he passed a river. As he looked down into the river, a dog with what appeared to be a bigger bone stared back at him. Jealous, the dog dropped his bone and reached for the bigger one, only to find it was merely a reflection, and his bone was now lost in the river.
When you are investing long enough you begin to see cycles repeat. Within those cycles different types of investments rise to new heights at different times. With Instagram came the rise of armchair advisors. In 2020 and 2021 I saw ads comparing stock investors to people who still use horse and buggy for travel 😊. Afterall, cryptocurrencies were where the fast money was. Fear not crypto investors, with history as a guide you’ll have your day again. From 2013 to December of 2021, an equal weight portfolio of Meta Platforms (Facebook), Apple, Amazon, Netflix, and Alphabet (Google) would have returned an average annual rate of return of 38%, with the best year being 105%! These stocks carry the acronym “FAANG” and were a significant reason large cap stock indexes and funds did so well over the past 10 years. In 2022, those high-flying stocks we loved for so long have all faced significant losses. Instead of big tech names, 2022 has seen companies like McDonalds, Pepsi, and Deere & Company outperform. Each of those three companies is over 50 years old, with the John Deere brand celebrating 185 years! I also have no doubt FAANG will have their day again. In my opinion, they are too innovative not to. I can remember after the 2008 housing market crash hearing stories of people who cashed in their retirement accounts to buy gold. While gold has certainly appreciated since 2008, it greatly underperformed stocks. I am a big believer that gold has a place in a portfolio, but not the entire portfolio. On a day to day, month to month and even year to year basis, investments (any kind) can move quickly. The trap has always been to chase the shiny object; switching to another type of investment because it appears, for the moment, better. It can become the equivalent of chasing a plane that has already left the runway.
Thomas Phelps, in his book, “100 to 1 In The Stock Market” tells the story of an elderly man who was planning the distribution of his estate which was valued over 14 million dollars. “How did you accumulate so much wealth?” the elderly man was asked. “I never worried about selling. I bought quality companies and held them for decades.” Even when there appeared to be a dog with a much better bone within reach.
The Power of Co-Marketing
If you're looking for ways to expand your customer reach, give co-marketing a try! Finding complementary companies and products that will help you reach your target audience is a great way to grow your business. The first step is defining who you are trying to reach and then looking for other brands they are likely to engage with already. Need some help with ideas, reach out to Carly (firstname.lastname@example.org) for a quick chat.
Attractive Interest Option in a Bear Market
Many structured income notes currently pay high interest of 10% or more. In my opinion, structured income notes are attractive for consideration right now because they can provide downside protection on both interest and principal. The fact that investment markets have already tumbled significantly this year, at the very least, adds to their downside protection. Last week Derek Ballinger and I discussed structured income notes and when they may become opportunistic to add to an investment strategy. You can listen to that conversation here.
Big Week for Financial News
All eyes will be on the Bureau of Labor Statistics when it releases the latest inflation numbers at 8:30 A.M. on September 13th. Inflation is measured by the Consumer Price Index (CPI), which fell from 9.1% to 8.5% last month year over year. With energy making up most of the increase year over year we expect the inflation rate to continue to decline. Regardless of the report, we also expect the Federal Reserve to continue to raise interest rates in the near-term. Federal Reserve Chairman, Jerome Powell, has remained consistent with his message of making the reduction of inflation the Federal Reserve’s top priority, even if it comes at the expense of the economy. A reduction in CPI will certainly help investors feel more optimistic about the future, but we are still a long way away from the Federal Reserve’s inflation rate target of 2-3%.
September is National Life Insurance Month
When constructed properly, life insurance coverage does not need to come as an added cost to your financial plan. It is part of the plan. Contact our office if you would like a free consultation.
Disclaimer: This newsletter is for informational purposes only and represents the opinions of Crosby Advisory Group. Investing involves risk including the potential loss of principal. Do not purchase investments simply because they were mentioned in this newsletter. Not all investments are suitable for all people. Crosby Advisory Group and Nate Crosby have ownership interest in NMD Insurance and CAG Marketing.
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