01/15/20 factlet; mutual fund investors do poorly

During the 30 years beginning in 1983, the average mutual fund investor earned 239%. During that same period, the S&P 500 index after expenses, grew 1102%!*

Investors practicing the Monday Morning habits earned 1102% during that period.

Over the last 30 years, the average investor saw a return of 3.66%, whereas the S&P 500 had an average return of 6.73%.

Investors practicing the Monday Morning habits earned an average return of 6.73% during that period.

 

 

*Bogle, J. C. Don’t Count on it John Wiley and Sons, Inc.

2020 forecast

“There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know.” John Kenneth Galbraith

Without question, the record-breaking expansion which we have been experiencing will end one of these days.

When will that day come?

The correct answer is, nobody knows. Doing a search for stock market predictions for 2020 produces 377,000,000 results. That is about 100,000,000 more than a week ago! None are reliable; a few will be correct, entirely by luck.  Those who make them we’ll get major publicity for their “foresight”.

There is nothing that we can add to this subject which will improve on the comments we made about one year ago and two years ago.

Enjoy!

Please note that the Monday Morning Millionaire Program contains opinions only. It does not provide any investment advice or endorsements.

Continue reading “2020 forecast”

Buy and hold, asset allocation, rebalancing

 

One of the Monday Morning Millionaire Program members’ habits is to buy and hold. There is no evidence to show that market timing is useful.

Another one of the members’ habits is to rebalance to a personal asset allocation when the market goes either up or down by a certain percentage.

What is that percentage? Is it the same on the upside as it is on the downside? How do we square buying and holding with rebalancing, a form of market timing?

As much of our investing as possible should be rules-based rather than judgment-based. Sound rules are inviolable. Judgment is often wrong. Nevertheless, investors need to use judgment frequently. Investor judgment needs to be adjustable in order to account for changes in the investing environment. For example, in the 1960s, trading commissions could run up into hundreds of dollars. Today, they are much closer to zero dollars.

In the 1960s, rebalancing effectively needed to have a percentage of portfolio value change sufficiently to offset trading costs.

Today, we can ignore the trading costs.

Rebalancing at smaller percentage pullbacks makes sense since they are more frequent. Rebalancing would take place into a higher trending market over time.

If we wait for a 10% pullback to rebalance, as we used to, we could miss out on several years of strong returns as well as rebalance at levels much higher when the pullback occurs.

We could improve results by rebalancing a smaller amount at a 5% pullback and then a larger amount at 10% and larger yet at 15% and so on.

It is a judgment call; it will work in our favor regardless of the percentages we select.

Please note that the Monday Morning Millionaire Program contains opinions only. It does not provide any investment advice or endorsements.

 

Michael McCloskey joins the Monday Morning Millionaire Program

We are pleased to announce that GreensKeeper President, Founder and Chief Investment OfficerMichael McCloskey recently joined the Monday Morning Millionaire Program.

Michael has decades of experience in the securities industry. He will provide valuable input to our members.

Michael manages investors’ portfolios actively (stock picking). The Monday Morning Millionaire Program encourages self-directed investing passively (no stock picking).

However, our members have many friends and relatives who are not prepared for self-directed investing. We encourage those members to refer their friends to GreensKeeper.

Clinicians Report® and Monday Morning Millionaire Program

Clinicians Report  (CR) placed our books Monday Morning Millionaire and The Six Habits of Monday Morning Millionaires on its best products list for 2019 and 2020 respectively. These two books are the foundation of the Monday Morning Millionaire Program investment philosophy.

CR tests over 750 product brands each year. Most do not measure up to the claims that they make.  At the end of each year, CR publishes the best products which the company evaluated in that year.

Until CR was founded in 1976 by Gordon Christiansen DDS, MSD, Ph.D. and his wife Rella, RDH, Ph.D., dentists only had the promotional material that manufacturers produced, to guide them about the safety and effectiveness of dental products, materials, devices, equipment, textbooks and techniques.  The rush to markets by manufacturers frequently resulted in dentists and their patients becoming guinea pigs.

CR now has 450 clinicians in 19 countries who volunteer their time to evaluate claims, as well as 40 on-site scientists and engineers. CR is free of outside funding and so can keep its research objective. It does not charge companies for the evaluations and derives revenue from clinical courses and subscriptions to the Gord J. Christensen Clinicians Report®.

Our two books are available at the Books tab on our website. The Six Habits of Monday Morning Millionaires is new and free.

The cannabis stock roller coaster

Cannabis stocks have been a huckster’s dream.

From one of our members, yesterday:

“All too familiar…  I invested $100,000 6 years ago at the very beginning. And then the founders disappeared. $34 million went missing. It was actually a scam, not just a bad investment.”

This member, a very successful businessman, ignored Habit Number Three:

“3: BUYING THE ENTIRE U.S. MARKET IN LINE WITHIN ONE’S ASSET ALLOCATION, that is, don’t pick stocks.

The member then writes:

“Five years ago I was on a roll. 100 grand was less than 10% of my annual earnings and I considered that money that I could afford to lose. I certainly didn’t go into it thinking I would lose it. It was a respected lawyer who recommended to me and a number of other people to get into this company. She’s now under investigation with the Ontario securities commission. I was interviewed by their fraud department. She’s probably going to lose her license to practice law and have to sell her $7 million home. It’s entirely possible the $500,000 diamond ring she was wearing was paid for by suckers like me…

“I’ll never see my money back but I hope to see her do some hard time. If these hustlers and fraudsters can scam me they can scam anybody.”

The Monday Morning Millionaire Program (15.5% annual return since 2012) states that the only reliable way to beat the market legally is to dollar-cost average it correctly.

All other attempts to outperform the market legally need investors to cast aside on or more of the six habits of highly effective investors.

That approach outperforms the market sufficiently frequently to keep investors coming back but not frequently enough to equal the S&P 500 over the course of a decade.

It is exciting and safe for investors to use in a fun portfolio if they have one. A core portfolio that is based on buying and holding an exchange-traded fund that parallels the S&P 500 will outperform this approach over a market cycle. Boring and effective.

 

 

The joys and sorrows of trading

The Stock Market is designed to transfer money from the Active to the Patient.” Warren Buffett, June 25, 2019. As everyone knows, Buffett is one of the most successful investors in history. 

Isn’t Buffett paraphrasing Paul Samuelson? The Economics Nobel laureate, a decade earlier, stated: “Investing should be dull. It shouldn’t be exciting. Investing should be more like watching paint dry or grass grow. If you want excitement, take $800 and go to Las Vegas… It is not easy to get rich in Las Vegas, at Churchill Downs, or at the local Merrill Lynch office.”

In their study of 66,465 accounts (the number is not a misprint) titled Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors published nearly 20 years ago (12 Apr 2000) Barber and Odean show that active trading by individual investors results in poor performance. (Brokers do all right; investors could do better, much better.)

In their paper titled Trading is Hazardous to Your Wealth: Evidence from Mutual Funds Around the World, last revised: 26 Jan. 2018, Dyakov et al show that the performance of a large number of actively-managed mutual funds is significantly lower than market returns. (Fund managers do all right; investors could do better, much better.)

Active traders use a large number of strategies. The elegance of simplicity eludes them. To get an idea trading systems, glance at 101 Formulaic Alpha  or  151 Trading Strategies..   None have a long-term record of profitability.

The Monday Morning Millionaire Program (15.5% annual return since 2012) offers a safe way to experience investing excitement, joys of excitement without leaving home.

Invest 5% or less in a “fun” portfolio.

For your core portfolio, follow the six habits of Monday morning millionaires and grow rich. Many of our members don’t feel the need for a “fun” portfolio

Please note that the Monday Morning Millionaire Program contains opinions only. It does not provide any investment advice or endorsements.

With fewer than 400 words, members can read this blog in less than five minutes. Following and studying the links embedded in the blog could take from half a day to a lifetime.