The Daily Meaning
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Not Weird At All
We must take the terrible with the great if we want the good. That's the secret to investing.
The Timing Couldn’t Have Been More Perfect
I received an amazing text yesterday! A casual friend texted me out of the blue, as he does from time to time. He loves talking about finance, investing, and the stock market. Here was his text: "When do you think the stock market will turn around and recover?"
A Middle Finger To Our Future Selves
To his detriment, he lived out the principles he preached way back then. He spent, spent, and spent, giving little regard for his future self.
OK, But Where You Gonna Get 9%?
The U.S. stock market has delivered a return of over 9% annually (and 10% annually over the last 100 years). Almost every time I discuss this topic, someone snidely asks, "OK, but where you gonna get 9%?"
Playing Us Like a Fiddle
I recently did a little informal survey on my Instagram account. Here was the question: "Without looking, how do you think the U.S. stock market has performed over the last 12 months?"
Reckless, I Guess
During that nearly 160-year stretch, from the late 1800s until today, the U.S. stock market has NEVER lost money over a 15-year period of time. Ever. Sure, history tells us that we could lose half of our life savings (on paper) over a five-year window.
If It Bleeds, It Leads
"Any thoughts on why the stock market is struggling so much right now? Do you think it will continue to be bad?" I stared at my screen for at least two minutes, trying to think of an adequate response. What in the world is he talking about?!?!
Closer Than You Think
I have good news for you today. Strike that, great news!!!!! I have great, amazing, fantastic news for you today. If you've been trying to make progress on the retirement front but feel like you're not getting as far as you had hoped, you're probably closer than you think.
Gambling vs. Investing
Based on available data, 94%-95% of sports bettors lose money. Remember when Uncle Johnny crushed that four-team parlay and did shirtless victory laps around the house?
Embracing the Chaos
But what about 8-10%!?!? Isn't that what we should use to gauge performance? Yes....and no. Let's play a little game. In the last 155 individual years, how many years did the stock market finish in the positive 8%-10% range?
Turns Out Old Isn’t Old
My friend had a different philosophy of life. In his words, we might die tomorrow, so we might as well have as much fun as we can now. And even if we don't die tomorrow, why wait until we're 50 or 60 to have fun, since we'll be too old to enjoy ourselves by then anyway.
Hyperbole For the Masses
Plunged. Tumbled. Sank. Crashed. Tanked. The media has had no lack of hyperbolic words to describe what happened to the stock market on Friday.
The Benefit of Hindsight
"You can't invest today in good faith. The &%$#@!& market is far too expensive. Every dollar you put in is begging to be lost. Stop giving your readers &@$#% advice!"
Someone Should Check On Him
My buddy had personally lost $200,000 (around 17%) and was now sitting on about $1,000,000 of cash in his portfolio. According to him, he was going to let the market continue to crash, and he would swoop back in to "buy the dip."
Well, Well, Well Again
In the entire investment world, there are only a few dozen people who can be successful at this for an extended period of time, and they aren't your brother's co-worker's neighbor. It's not your financial advisor, either!
Blood Money
One reader took exception to my analysis and aggressively came to the defense of my friend. "You're a finance guy, Travis. You know the math. If your friend invests $850 each month for the next 25 years, that's $1,000,000. That's how he gets to create generational wealth. He'd be stupid to throw away that opportunity."
What’s Under the Hood?
"If the stock market is at an all-time high, shouldn't my retirement account also be at an all-time high?"