The ideal investment

It is understandable that ideally, investors expect a reasonable return on their investments, the safety of their capital and easy access to their money at low-cost. Writing in The Battle for Investment Survival (Classics Edition) G.M. Loeb, called “the most quoted man on Wall Street.” by Forbes magazine states that “this totally ideal ‘investment’ is as totally non-existent.”

Our blog of June 12, 2018, titled “Trading; hazardous to wealth”  shows that during the five-year period from 1991 to 1996, when the market returned 17.9%, the most frequently traded accounts in a list of a 66,000, earned 11.4%.

Covering a more extended period than that, the twenty years ending in 12/31/2015, Dalbar Inc. shows that while the S&P 500 Index grew by 9.85% annually, the average investor’s portfolio grew only by 5.19%. The frequently quoted explanations for these results are based on investor psychology. Indeed, investor psychology can lead to unwise investment decisions, however, let us note Loeb again. He goes on to say:

Specifically, the wealth of the world does not increase fast enough to allow payment of compound interest or pyramiding of profits on existing “invested capital.” Every so often adjustments are made partly through bankruptcies and other scaling down of obligations and partly through currency depreciation. And it’s all as old as the hills.

With the preceding as a background, please note that over a period of 10 years or more, the Monday Morning Millionaire Program members outperform over 90% of portfolios including those managed by professionals.