Month: April 2018

Hi Everyone,

The quarter has gotten off to an auspicious start (after a terrible end to Q1) as earnings season came just in time to bring some welcomed good news to the markets.  Just when things were going smoothly and most investor’s portfolios had gotten back into the green for the year…more volatility.  To save yourselves some of the mental anguish, until the S&P 500 makes a new high above the March top of 2800, or makes a new low below February’s selloff of 2553, you shouldn’t even give this market another ounce of your attention.  There will be fear mongering, followed by excitement, followed by confounding just like previous sideways markets.  Instead of listening to people try and predict the future, let’s get a bit more knowledgeable about the past…

Happy Reading,
Adam

 

ARTICLES

The Drawbacks of Behavioral Finance  – This is from the day before the February low (not a coincidence).  Good stuff, from a brilliant writer, Ben Carlson.

Sometimes This Sucks – This is three trading days before the April low (again, not a coincidence).

The Freakishly Strong Base – This is a longer one about the power of compounding, but goes into the net worth of Warren Buffett and how it can be an illustration of why we should all have gotten started investing much earlier.

 

CHARTS AND GRAPHS

US Equities Still Expensive to the Rest of the World

Earnings vs. S&P 500 Price Chart

 

QUOTES OF THE WEEK

“The amount of energy necessary to refute bullshit is an order of magnitude bigger than to produce it.” – Alberto Brandolini

I hope you enjoyed the previous post and it gave a glimpse into the structured thinking which goes into your personalized financial advice.  In total return terms (this means including dividends) this is the first down quarter since Q3 of 2015, and only the 5^th down quarter in the last 9 years.  That doesn’t mean anything other than we’ve had it really easy during this bull market, and that “this too shall pass”.  Hope you enjoy reading (and listening) as much as I did.

– Adam

Hitting the Links

The Big Picture  – The moral here is to have a plan.  If you can’t answer the question of what we are going to do if the market falls another 5%, 10%, 20% from here, you need to call us to get on the same page, and make sure you’re comfortable.

Dividend Aristocrats Have Less Volatility and Greater Return

Investment Management vs. Financial Advice (and which one you’re really paying for)

Podcast with Josh Brown – Josh Brown, The Reformation – if you’re into podcasts, this is one is worth an hour of your time.  Josh and the team at Ritholz Wealth Management are one of the main reasons that I started the blog, and in future posts, you’ll most likely be reading a lot of the research put out by his team (most notably Michael Batnick and Ben Carlson).  Josh started on Twitter before Finance Twitter became popular and he’s as close to a thought leader as the Millennials will tolerate (Josh just turned 40, so he’s a wannabe millennial anyway).

“I’ve been in this business for 67 years now, and I’ve been well served by my unwillingness to say anything about short-term market behavior with confidence.” John Bogle, Founder, Vanguard Group.

“Traders, when they make profits, have short communications; when they lose they drown you in details, theories, and charts.” – Taleb, author of The Black Swan.