I have been suggesting to every one of my clients, everyone who attends my speeches, and everyone who reads my blog or receives my newsletter for almost two and a half years, that a stock market crash is imminent. For two and a half years I have been wrong.
I haven’t gotten in trouble with prospects and clients because I haven’t told them, I asked/suggested to them. They decided whether the information fit their circumstances or did not. They then acted accordingly based on THEIR belief, not mine.
However, clients, friends, and other agents/planners have loved showing me that I was and continue to be wrong. Please, I don’t take it personally nor am I offended. It was only an opinion based on probabilities. I don’t have all the facts. I have not received one call from the President, the Secretary of the Treasury or the Chair of the Federal Reserve. To be completely honest, if they don’t know what’s going to happen, how could I?
Isn’t that the point? If the probability of danger is increasing exponentially, ask yourself this question; “If no one knows what will happen, should you be real aggressive financially or should you guard against catastrophe and learn to become more of a financial counter puncher; always putting yourself in position to take advantage of any bad things that could happen?
Many of you have feared taking my recommendations because they are too conservative and you actually might be lose out on some gains by being too conservative.
Ah, but take a moment, because the math simply shows a different story.
Let’s start with the last two and on half years. These are the years that many declared me “Too
cautious! Too conservative!” “Had I listened to you I would have missed out of some stellar years in the market.”
Opinions are not worth much, so let us remove the opinion and look at the math…..
On May 1st, 2013 the Dow Jones Industrial Average closed at 15,115.57. On September 28th, 2015 the Dow closed at 16,001.89. In 2.3 years the Dow increased 5.86 percent. The average return for that time was 2.55 percent.
The Dow has dropped from 18,300 or so in the last 30 to 45 days. No one would have gotten out. No one. (That bring up another question: Have you ever heard a financial planner say it is a good time to get out of the market? Or heard those same planners say it is a bad time to get into the market? ) Also, we need to consider dividends. The dividend on the companies in the Dow Jones Industrial Average is barely over one percent.
I have several products I recommend, that if you owned during that time frame would have approximated or even beaten that return without the volatility and risk. (Put fear and worry in place of volatility and risk.)
The math becomes even more interesting and counter to what you have heard elsewhere when we increase the length of time we do the measuring.
Here’s another example: On September 1, 2007 the Dow closed at 13,895.63. Again, on September 28, 2015 the Dow closed at 16,001.89. That is an increase of 15.16 percent for those eight years. That is an average return of 1.90 percent. Even adding in dividends, the return is still barely over 3 percent and that is before fees and taxes.
Every product I provide including the “horrible place to invest money,” cash value life insurance would have equaled or beaten those returns with lower or no taxes and after fees. WOW!
Just one more; on December 1, 1999 the month before the supposed Y2K trauma, the Dow closed at 11,497.12. It closed on September 28, 2015 at 16,001.89. That is a 39.18 percent increase for those 15.75 years or a 2.49 percent average annual return. Even if I included dividends, my clients have enjoyed better gross and net returns.
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