Worst Atrocity Since Hiroshima: Shockwave About to Hit
James Dale Davidson is back - once again - with another portfolio-rattling exposé. His last exposé helped lead to six Congressional hearings... and blew major holes in America's big media monopolies. Now he is about to do it again, but this time on a story so polarizing, it will make the Watergates of the past - read like back-page fodder. What's more, the implications it will have on almost every investment you own... promise to be as equally dramatic...
To view this shocking new video, click here. | |
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| Wednesday, May 14, 2014 | Issue #2291 | |
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Why Are So Many People Wrong? Marc Lichtenfeld, Chief Income Strategist, The Oxford Club
 After Matt Carr wrote about the American Association of Individual Investors (AAII) sentiment survey, where bullish and bearish sentiment fell, but neutral sentiment spiked, I took a closer look at some of the numbers over the weekend.
And what I found shocked me.
Over the long term, the majority of investors surveyed were dead wrong.
Here's what I mean.
Since 1987, the weekly AAII sentiment survey had the following average reading:
Bullish: 38.8%
Neutral: 30.7%
Bearish: 30.5%.
In that period, the S&P 500 has gone up 498% - a compound average growth rate of 7%, not including dividends - pretty much in line with historical averages.
Think about that for a minute.
Over a quarter of a century, despite some big moves up and down, stocks performed as they historically always have, averaging about 7% gains per year.
And while stocks went along their usual course higher, at any given time, the majority of investors were, on average, not bullish.
Nearly two-thirds of investors, in fact, expected the market to go down or remain flat.
How is that possible? Have we become a world of glass-half-empty pessimists?
The news media certainly doesn't help. Watch your local news, and it's all rape, murder and other morbidly fascinating tragedies. National news focuses on war, terrorism and whatever financial crisis is looming or has just occurred.
And of course the financial media needs to scare you in order to keep you hooked so you know what and when to buy and sell.
Jim Cramer wouldn't be a household name if he told you to buy a few quality stocks or an index fund and hold them for the next 20 years. Heck, I wouldn't be asked to be on CNBC every week if, when they ask me my opinion on a stock, I said, "instead of buying the stock, just buy a cheap index fund or basket of dividend payers and hold for 20 years."
But for most investors, that's precisely what they should do. Alexander Green's Gone Fishin' Portfolio is one of the best performing portfolios in the business for a very good reason. He recommends a mix of assets with very low costs that you should hold for years. It's inexpensive and it works.
And my own 10-11-12 strategy of recommending Perpetual Dividend Raisers and sticking with them over the years not only captures that 7% gain per year, but also delivers double-digit yields and returns on a conservative portfolio within a decade.
It doesn't make sense to invest scared. Despite the occasional bubble or risky valuations, stocks still go up over the long term.
If you invested in the S&P 500 at the top of the market in October 2007 and simply held on, today you'd have a gain of 21%. That's not terrible when you consider that we were on the verge of financial Armageddon, suffered through a historic recession and have experienced a lukewarm rebound.
Even after all of that, a long-term investor made money. Not a lot, but they still made money. Their 401(k) was made whole and then some.
If you're a long-term investor, I hope you won't be part of the majority that is constantly afraid. That's no way to live. And it's no way to make money.
Good investing,
Marc
P.S. No one can predict the direction of the public stock market that most people invest in. That's why celebrities and Washington insiders, including President Obama, put their money in their own private stock market, where returns predictably dwarf the little guy's. You can access this market, however... if you know how. Marc's new report on it is available by clicking here. | |
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Are you ready?
A new technology is about to transform America's money supply - and our daily lives. It'll accelerate commercial transactions by up to 25,823%. So a purchase that might normally take 7 minutes will take 2.09 seconds. A stock trade that now takes 20 minutes will take 4.6 seconds. Right now is the time to act. Early investors could see as much as 229% gains or more, quickly. Get the details here. | |
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Homebuilding stocks are down nearly 5% so far in 2014, but as spring approaches, an increase in sales could just be the remedy these shares need. Read On... | |
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Many people are surprised to learn that not all insider trading is outlawed. In fact, much insider activity is not only perfectly legal, but completely transparent. Read On... | |
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I'm often asked how much of an investor's portfolio should be in commodities. If you're a trader or speculator, that's up to you. But a long-term investor with a five-year-plus horizon? Virtually none. Here's why... | |
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It's not only possible, but technology is already available to make it happen. Geneticists at Cambridge University and MIT all are predicting we will live far longer than most people believe possible.
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