-History says take note
There are two old adages about the beginning of the year that are supposed to tell us the direction of the stock market for the whole year to come. The first is “so goes January and so goes the year” and the second says the same about the first five days of trading. Say what you will about these cute little sayings, I have found them to be very accurate.
Interestingly enough, in 62 of the last 85 years the US market has moved the same direction in January as in the full year ahead. The first five days, as It turns out, is almost as good as the full January, as over two-thirds of the time since 1927 the first five days have correctly indicated the direction of the market for the rest of the year.
These sayings may make no statistical or even logical sense, but with a horrible first 5 days and January as a whole, they have my attention and they should have yours too!
Last year was so good for the averages and ended with such optimism that a repeat was practically impossible. Of course most investors didn’t get even close to the returns of the indexes as well they shouldn’t. No one retired or in the retirement red zone should be invested anywhere near the risk of the market. In the next market downturn, which may not be that far off, they would do devastating harm to their finances and not have time to make it back.
It’s funny how we forget the pain and sorrow of past bull markets once things recover. The last time the market crashed it only took 6 ½ years for it to break even, which is quick from a historical perspective but a ridiculously long time if you’re in or planning for retirement.
Investors must remember that in the crash of 1929 it took 25 years to get your money back! If you had bought stock in September of 1929 when the Dow Jones Industrial Average reached 381.17, you would have watched stocks collapse until hitting the low of 40.56 on July 8th, 1932. So if you had $100,000.00 invested, you watched it become $10,640. It wasn’t until 25 years later, on November 24th, 1954, that the stock market itself reached its previous peak.
The key for every investor is to be properly invested so you are getting the best returns, but with the least risk possible. Most investors take on way more risk than they need, should and many times think they have. When I sit down with folks to give them a free 2nd opinion, it never ceases to amaze me how surprised, scared and angry people often get when they see their risk level.
That’s why it’s so important for retirees to those planning for retirement to graduate to a qualified retirement advisor who can help put a plan in place that incorporates not just your investments but everything: Social Security timing and optimization, Elder care planning so you don’t give away all your money at the end of life, setting up a retirement income stream that cannot outlive as well as bulletproofing your portfolio….and it all starts with a free Retirement Income Analysis.
…… and that’s where we can help. To learn more about The Springer investment approach, which is our powerful proprietary Investment Management Strategy designed to manage risk and deliver returns, in any market…and/or get a free second opinion on your portfolio, simply reply to this email, or give me a call for a no-cost no-obligation consultation today at (916) 925-8900.