| Monday, August 4, 2014 | Issue #2346 | |
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Why Investors Have Never
Had It Better Alexander Green, Chief Investment Strategist, The Oxford Club
 In a recent column, I pointed out that few investors seem to realize just how positive the investment landscape looks today.
We have near-zero short-term rates, an accommodative Fed keeping down long-term rates, a rebounding housing market, a booming auto market, unemployment at its lowest point since September of 2008, an energy renaissance in the U.S. (thanks to fracking and horizontal drilling), growing end markets for U.S. goods and services in giants like China, India and Brazil, U.S. household net worth at an all-time high of $81.8 trillion, record corporate profits, record corporate profit margins and record corporate profits as a percentage of GDP.
The trend is indeed your friend. No wonder U.S. stocks are near all-time highs.
That friendly trend could abruptly end next week or next year, of course. But as I mentioned to attendees at our Private Wealth Seminar in Quebec last month, it's not just a positive economic backdrop. Investors themselves have never had it so good.
Plenty of Options
Let's start with the gamut of investment choices available. There have never been more publicly traded companies, no-load funds, or easy-to-purchase exchange-traded funds (ETFs).
You can invest in virtually any company or sector of any market in any country anywhere in the world - and without the help of a high-paid Wall Streeter.
Then there's the ease of information available...
Twenty-five years ago, I wrote research reports for an international brokerage firm. This generally required multiple phone calls to investment banks and trading houses where I coaxed, cajoled, wheedled (OK, begged) other analysts to send me what I needed. When the information arrived - usually days later - it required follow-up calls to update the data.
The Web changed all that. Research that once required hours in the periodical room at the library or days sifting through reports is done in minutes. Information and ideas scattered or hidden around the globe can be gathered instantly. Plus, it's often free and easily available to anyone who takes the time to learn where to look.
Monitoring your portfolio has never been simpler either. It used to be you had to look up the prices of the stocks you owned in the business section of the paper. (When was the last time you did that?) Or you could call your broker, get placed on hold for several minutes, and eventually get a quote that - by the time you received it - was no longer current.
After getting your less-than-timely quote, you could place a trade with your broker, who would then put you on hold again while he jotted it down and hustled it over to his trading desk. In those days, a market order was a real roll of the dice.
Today you don't think twice about getting a real-time quote, placing a trade with a click and getting a near instantaneous confirmation.
Trading Is Cheap
Costs used to be exponentially higher too. Brokers routinely sold mutual funds with front-end loads as high as 8.5%. That's not a misprint.
And prior to May 1, 1975, brokerage commissions were fixed. Deregulation - and the debut of Charles Schwab - changed that. The Internet, however, lowered your costs even more. Now you can click a mouse - or tap your smartphone - and buy a stock for five bucks. Another click - another five bucks - and you're out. (Compare that to your typical real estate closing.)
Spreads are far thinner today too. When I started in the brokerage business 30 years ago, a large stock might have a spread of an eighth of a point and a small one a quarter of a point. Tack on a 2% or 3% commission and you were already down 5% by the time you got your trade confirmation.
Today - thanks, in part, to wrongly detested high-frequency traders - liquidity is greater than ever and bid/ask spreads are often a penny.
So be thankful. It's not just that stocks are up 135% over the last 5 1/2 years. Your investment choices have never been greater. Information has never been more easily available. Monitoring your portfolio has never been simpler. Spreads have never been thinner. Commissions have never been lower. Executions have never been swifter.
In short, you have all the tools you need. The only thing you may lack is the most important part of all: the investment ideas to take advantage of them.
If you're a valued Member of The Oxford Club, however, you already have those too.
Good investing,
Alex
Editor's Note: The fracking revolution that Alex mentions has created countless new millionaires. And we may be on the cusp of yet another energy renaissance. Sean Brodrick recently discovered a company that's doing what should be impossible. It's creating gasoline... without oil. The implications for this company, and its lucky investors, are staggering. To learn more, click here. | |
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A coming $91 trillion market shock - lasting just 3 minutes - could gut our Social Security system once and for all. If you're at or near retirement age, you need to know what's coming. And there's still time to prepare. Here's the shocking truth, from America's most conservative income investor... including his recommendations for surviving the possible crisis. | |
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In today's edition of Investment U Plus, subscribers get an up-close look at two very different stocks to learn how to separate hype from reality. To get access to the premium version of Investment U, click here. | |
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Halliburton (NYSE: HAL) is the No. 2 oil services company behind Schlumberger (NYSE: SLB), and it is finally firing on all eight cylinders, finally! Read On... | |
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Due to Thursday's 2% stock market sell-off that pushed prices below this year's major uptrend line (black), we will discuss the chartist's most basic tool... the uptrend line. Read On... | |
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This catalyst converts one of the Earth's most abundant energy sources into gasoline. 
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