I’m a believer in the value approach to investing – not that I don’t also recommend growth investments – its just the value approach makes more sense to me and, historically has outperformed. This link is an interview with Charles Brandes, one of the great value investors of our time:
“Despite being one of the longest and strongest bull markets of the post-war era…the U.S. stock market is still at worst fairly priced and even cheap relative to its post-war trendline. By comparison, the other two major bull markets since WWII (i.e., during the 1950s–60s and again in the 1980s–90s) both ended only after U.S. stocks rose significantly above trend for several years…
“Indeed, the total U.S. stock market is currently priced comparably to the early-1950s or the early-1980s. Perhaps equally important, even the popular S&P Index is not nearly as richly-priced today as it was in the 1960s or the 1990s.”
~ Jim Paulsen ~
“Is the trend a friend?”
August 31, 2016
The memory of the last financial crisis (2008-2009) may have faded for you – if you didn’t make the big mistake. At the time, we all felt the short term pain of the 30%+ decline in our portfolio’s and the agony of the following 18 month up and down grind. Those that made the big mistake and sold – continue to pay as the markets continue their upward trajectory.
The grinding market incline from the last bottom in March of 2009 has felt agonizingly slow at the time but in retrospect has recovered relatively quickly. We all lived through the so called experts predicting immediate recessions, wild inflation and deflation. Through out that period I preached faith, patience and discipline – because history told me everything I needed to know. This had happened before and has always turned out the same – the equity market recovers and goes on to new highs.
I have met a few people who lost significantly during that period. They made the big and fatal mistake – they sold at the bottom. With the media screaming economic apocalypse and never having gone through a period like this and with no one to guide and support them – their error caused a tremendous loss in their savings – never to be recovered in this lifetime.
As a financial advisor guiding my clients in their financial affairs I see my duty as preventing them from making the big mistake. Anything that risks a significant portion of my clients assets – buying or selling at the wrong time, too much invested in one asset, over spending. A level and cautioned approach is what I offer. My clients financial success and a life well lived is the reward.
We’ve had low interest rates for many years and the current thinking is they will be low for longer. It’s interesting to consider how interest rates, low or high, impact the returns in equity markets. Ben Carlson looked at the historical numbers in the US and tried to draw some conclusions.
LINK TO ARTICLE