It’s now official. As of last Friday, all 3 major indexes entered what is called “Correction Territory”, as defined by dropping 10% from their recent highs. Seems like a lot worse than that, thanks to all the press and talking heads we have out there. The last time all 3 of the indexes, S&P 500, Dow Jones Industrial Average and the NASDAQ, made a move like this was in March 2016.
In his best-selling book, “Stocks for the Long Run”, Jeremy Siegel, illustrates that, over time, stocks outpace inflation by a wide margin. Hence, the attached article “What will a $100 bill be worth in a year”, illustrates what the worst tax anyone faces is the inflation tax. Our purchasing power is reduced every year because things get more expensive every year. By staying invested in equities, no matter how painful at times, gives us an opportunity to compete and beat inflation.
And remember, we need to keep the big picture in mind. I want to keep repeating what our portfolio managers are doing that is a totally unique and a one of a kind investment strategy. One factor is a built-in strategy for a yearly cash flow of about 7%+/-, in addition to dividends and interest and market returns. Another ingredient included is that, in the event of a sudden and dramatic drop like 9/11, the portfolios are designed to recover most, if not all, the losses. The only drawback is that, if the markets trend down as we’ve experiencing now, these portfolios will underperform market returns. (There is no free lunch) And, please always remember there are no guarantees when it comes to investing in the equity markets and investing does have risks.
BTW, Jean & I did survive the snowstorm without losing power, except that we were housebound for several days before we got our driveway cleared. Let’s all hope that next week is better for the weather and equities. If you have any questions or wish to talk, please, don’t hesitate to call or email. Have a super week.