Taking Control Of Your Financial Future
2011 went out with a whimper.
After a tumultuous year that saw the S&P 500 as high as 1,370 and as low as 1,074, the S&P ended the year exactly where it started.
I’m not exaggerating…
The S&P started trading on January 3rd at 1,257 and it closed at 1,257 on December 30th.
With one trading day to go, the S&P stood at 1,263. But stocks limped to the finish line on the last day of trading with exactly a six point loss to finish the year unchanged.
Now don’t get me wrong, a six point increase in the S&P amounts to less than a 0.5% gain… but it’s still a gain. After all of the ups and downs, a gain (no matter how small) would at least give us something to hang our hat on.
Unfortunately, that’s the good news.
The bad news is the majority of mutual funds lost money this year. According to Lipper, 92% of the 8,036 funds they track are down for the year. And the average loss for stock funds is 4.1%.
As an investor, that just doesn’t cut it.
I don’t know about you, but I want to make money on my investments… every year. I work too hard for my money to only get a positive return in years where the entire stock market goes up.
Seriously, the S&P has been down or flat five out of the last twelve years. I won’t accept not making money nearly half the time. And neither should you…
But that’s exactly what old guard money management firms like Vanguard, Fidelity (FNF), and even major brokerage houses like Morgan Stanley (MS) tell you to do. They still subscribe to an investment model that doesn’t work.
I’m sure you’ve heard of it. Save more, spend less, invest in diversified portfolio, and buy and hold stocks for the long term.
For instance, I follow Vanguard Group’s Twitter feed. They’re constantly posting “helpful” investment tips like… “Lucky enough to get a year-end bonus or salary increase? Consider upping your #retirement plan contributions. #savemore”.
And they also sent out this gem, “What you CAN control in 2012: having a #financial plan & asset mix that fits your risk tolerance & goals, putting away as much $ as you can.”
Look, that’s great and all but it’s complete garbage.
Let me give it to you straight…
Even if you pinch every penny, live below your means, and invest in diversified mutual funds, you’re not going to have the type of retirement you want. Sorry to break it to you but it’s the cold hard truth.
Buy and hold as an investment strategy is dead.
You just can’t put your investments on autopilot anymore. It hasn’t worked for more than a decade and it’s not going to start working again anytime soon.
But the old guard investment firms can’t accept reality. They’ve staked their reputations and businesses on buy and hold. So they’re going down with ship.
The good news is… you don’t have to sink along with them. There’s still time for you to jump in a lifeboat.
Here’s the deal… if you want to retire someday, you need to take control of your investments. You simply must actively manage your portfolio.
I’m talking about identifying good investments. Then putting your money to work in those investments. And then managing the trade.
For example, if you had invested in Chipotle Mexican Grill (CMG), who’s entire business consists of making burritos, you would be sitting on gains of more than 50% for the year. That’s infinitely better than the S&P’s 0% return or the losses the majority of mutual funds racked up this year.
The point is investing selectively in a few good stocks like CMG or even actively managing a portfolio of ETFs is better than buy and hold.
Stop listening to the old guard investment firms. They’re spending millions of dollars every year to convince investors that buying and holding a diversified portfolio for the long term is the only way to make money in stocks.
If you’re ready to take the leap to ensure you can retire someday, but you’re still unsure how to find the right investments… you’re in the right place. We’ll be here delivering unbiased investment ideas every single day. And we’re committed to making 2012 your best year yet.
Category: Stocks
