The December Rout
BLOOMBERG, DECEMBER 26, 2018, 10:23 AM
INVESTORS SCRAMBLE TO PULL CASH OUT OF MUTUAL FUNDS
Investors withdrew $56.2 billion from mutual funds during the week that ended Dec. 19, according to data from the Investment Company Institute. The mutual fund market hasn’t experienced a one-week outflow so large since October 2008.
REMEMBER THESE HEADLINES DURING THE “DECEMBER ROUT?”
We’re always preaching patience and long-term investing but we’re also well aware that scary headlines such as the ones above make it difficult to remain in the market when “experts” are warning that the world is coming to an end. So, I decided to track the daily headlines post-“Rout” to see how helpful the daily news might be for investors. I believe you’ll find the almost daily flip-flopping enlightening and it will persuade you to ignore the financial pornography and remain a patient long-term investor. Be sure to note the flip-flop between the red and green boxes, particularly the heavy ones.
Obviously I didn’t know where the market was going when I started this, but I haven’t been surprised that the media coverage followed the classic pattern below.
The moral is, next time you think you should make your investments decisions based on financial pornography and “breaking news,” reread the history below since the beginning of the “December Rout” and think twice before you bail out.
Investment success is based on time IN the market, NOT market timing!
FINALLY, AFTER READING THIS I THOUGHT YOU MIGHT ENJOY A BIT OF CREDIBLE OPTIMISM FROM WARREN BUFFETT
Buffett: Stocks are ‘virtually certain’ to rise in years ahead
‘Miraculous’ U.S. economy remains the engine, says Berkshire chief. He’s not worried.
Warren Buffett assured Berkshire Hathaway investors that they’re likely to continue seeing “substantial” investment gains, aided by what he describes as the long-running U.S. economic miracle.
“Our expectation is that investment gains will continue to be substantial—though totally random as to timing—and that these will supply significant funds for business purchases,” Buffett said in his annual letter to Berkshire
Naysayers may make money by pushing “gloomy” forecasts, he said, but “heaven help them if they act on the nonsense they peddle.”
https://www.marketwatch.com/story/buffett-stocks-are-virtually-certain-to-rise-in-years-ahead-2017-02-25
If you made it this far, I hope you found it useful and this history lesson provides some comfort as we struggle (once again) through volatile markets. Just remember, patience pays and we’re here for you if you’d like to chat further.
Sincerely,
Harold Evensky
Chairman
Evensky & Katz / Foldes Financial Wealth Management
Categories
Recent Insights
-
Before the Ballots: The Strategic Advantage of a SLAT During an Election Year
With less than 70 days until election day, the future of both the White House and the Senate hangs in the balance. Regardless of who wins, the ongoing challenges of rising federal deficits, unprecedented spending, and lower tax revenues could pave the way for higher taxes in the future. The estate tax exemption, which primarily…
-
Understanding Form 5500: A Guide for Business Owners
When it comes to managing your company’s retirement plan, one of the most important responsibilities is filing Form 5500. This form is crucial for maintaining compliance and protecting both your business and your employees. Let’s break down what Form 5500 is, why it matters, and share some practical advice on what to do if you’ve…
-
Expert Insight on Financial Independence for Women
The Women’s Guide to Financial Independence
-
Average Retirement Account Balance of Americans
Retirement Savings by Age
-
Issues to Consider When Creating Your Estate Plan | 2024
Estate planning can often be overlooked, yet it’s crucial for ensuring your wishes are carried out and your assets are managed effectively. Many people are unsure where to start or what questions to ask. This checklist is designed to provide clarity and guide you through the essential elements of estate planning. Key Considerations Include: Use…