Last week we received a Wal-Mart sales flyer in the mail. In it, they touted the virtues of "buying now at the lowest prices." They claimed that they are working hard to help us save money. They look for us. You are on our side, right? Well ...
Fidelity Investments has given us a mass e-mail last week. In it, they touted the virtues of investing a buy-and-hold strategy. "Stay the course," she announced and your long-term investments will do well. Keep the purchase and possessionStocks during bull and bear market cycles and does good. Fidelity manages our company 401 (k) plan. You are on our side, right? Well ...
"Stainless Steel Cookware Set"
Let us face it: Wall Street and Wal-Mart are both in business to make money. They make money by selling products, over and over again if you need them or not. They are experts in the marketing of these products in a way that you think you really have to have them.
They may or may not need that fourth flatTV in your home. It may or may not have a second stainless steel cookware set for your kitchen. Wal-Mart will try its best to convince you that you need them. They are very successful in this way. That's how they make money.
It may or may not be to buy shares in a bear market. They may or may not have to be holding stocks in a bear market. Wall Street will try to convince you to stay invested. They are very successful in this way. That's how theyMake money.
If the performance (or lack of performance) of the average 401 (k) account for the last 10 years has taught us anything, it is this: for mutual fund investors, is the old buy-and-hold strategy dead. It is not simply buried. Here are some dirt on the grave:
- On 30 June 1998 the S & P 500 on 1133rd On 24 September 2010 the S & P 500 at 1148. Although there are three cycles of boom during this period the two bearish cycles, also tookSpace left "the course" investors with a 15-point (1.3%) to gain market. If do not meet for employee contributions and company, the investor results would have basically flat for this period of twelve years.
- If the investor held stocks during the 2000-2003 bear market and were within a few years of retirement, they were defeated. The same applies to the collapse of 2008. Many people who planned to work had to give up those years and still trying, "catchon. "
- Company fits shares, reinvested dividends and stock average investor certainly have the bottom lines in the past 12 years helped. However, the old saying that stocks are usually of 10% over the course of time not true. Wall Street now says that 7% is typical, but most experts agree that 5% more yield and the average was less than that during the past decade.
Investors who save for retirement by the IRA advantage in a position to pickindividual shares for their accounts. Buying solid companies that pay good dividends can help us, the storm of bearish cycles. IRA investors also have access to ETF's, which they can exposure to certain market segments, precious metals, specific binding species and even "market for short vehicles that allow them to make money in falling markets.
For most 401 (k) investors, however, are the only mutual fund investments. This puts them at the mercy of market cycles. Since thedo not surpass the majority of the Fund S & P 500 on average, why should an investor buy or hold it during a downturn?
A better investment strategy would be in equity funds during the bull market phase and moving into cash and / or to invest pension funds during bearish phases. A simple trend-following strategy would you protect your money during bear markets and him to work during the bull market.
Looking back over the past ten years, we had four different marketPhases:
1. 2000 to 2003, a bear market phase (S & P to 50.5%)
2. 2003-2008 was a boom-phase (S & P up 105%)
3. 2008-2009 was a bearish phase (S & P to 57.7%)
4. 2009 to 2010 was / is a bull market phase (S & P up 72.3%)
Had the use of a simple trend following method shows:
1. 2000-2003 loss of 11-12% change
2, 2003 to 2008 earnings change of 65-70%
3. 2008-2009 loss of 11-12% change
4. gain from 2009 to 2010 account40-45%
Although trend-following investors move into cash and / or bonds during cycles to keep making their 401 (k) contributions and get the company match. Are you still earn money. If the next cycle starts up, they are willing to put more money to work.
Why does not this view from Wall Street? For the same reason Wal-Mart never told you not to buy from them. Neither make money when you sit on your money! The man in the suit youInvestment advice is not from the Wal-Mart greeter handed over the latest sales flyer dissimilar. They are both pushing products.
have learned over the years to educate the consumer even better when it comes to their spending, especially on big-ticket items. Buy Without doubt, the exploration of a new flat panel is much more interesting than the exploration of the markets, but 401 (k) investors need to educate yourself as well.
Include trend following in your market research. It hasabout much more than "buy and hold" was and it still works. Our website was created to ease www.hardhatinvestments.com 401 (k) and IRA investments available guidelines for working people. We preach and practice a simple trend following method that the investor holds on the right side of the market. Get your investment education began with us and learn to take care of your line not to take theirs!
