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CLIENT SAFE CONTENTS KIT
As you may know, as a part of providing comprehensive wealth management Mark encourages advisors to supply their best clients with a fire proof safe to store their vital documents. Many advisors find this to be an effective tool in maximizing client relationships. We have now developed an easy, ready-made solution to get everything you need to make this happen.
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The Next Ten Years 
I have a lifelong friend that always shares the story about how his father taught him to swim. He put Allen into the family boat, drove him to the middle of the lake and threw him into the water yelling, "sink or swim." It's the way we taught our children in the fifties, which is probably one of the reasons for so much rebellion in the sixties.
It appears that many a client has come to believe that investing is fraught with the same perils, that we bring them into the middle of this quagmire called investing and throw them in. With many a lesson learned over the past decade, investors today have opted for the security of bonds preferring the safe route over the more exhilarating one.
Without question, investors are experiencing a degree of frustration. Over the past 12 years they have ridden the market up, ridden it back down and many, if lucky, are right back to where they started.
A recent news article stated that many investors are saying they would have been happier spending the money rather than saving it. Some are even suggesting that building a pool would have been a better use of their money, while others, jokingly, state a boat would have been a better investment. If you have ever experienced the thrill of being a boat owner, you know just how true that statement resonates. A friend of mine (by the way, you don't want to own a boat, you want to have a friend who owns a boat) once told me that BOAT actually stands for: "break out another thousand."
Dissimilar to truly poor decisions, the stock market does not rightly fit into that category. Unlike the second happiest day of a boat owner's life-when they sell it, equity investors are rewarded for their patience and perseverance. History has shown that whenever the market has experienced 10 years of poor performance (an average rate of return of 5% or less), it has always been followed by 10 years of better performance.
According to Lipper, since 1928 there have been eleven such periods. The most famous of them all, the period between 1928 and 1937, which saw the DOW's 10-year average return at -0.2% was followed by a ten-year period that averaged +9.3% (keep in mind that we were still within the throws of The Great Depression and WWII). The best performance saw a decade with returns exceeding +18% and the worst, roughly +7%.
Our job is to metaphorically hold our investors' hands and give them the advice they currently do not want to hear - to hold stocks and even add to their positions and to see the equity markets as an opportunity. At 53 years-old, if I had my "druthers" I would rather the market stay low for several more years as I accumulate more shares (dollar-cost averaging) hoping that right before I choose to retire, the market explodes upwards taking the value of my shares with it (time value of money). These two lessons were taught to me in my early days as a stockbroker in 1983.
Our job is to hold true to the values that we were taught at the beginning of our career like my friend was taught in the beginning of his childhood, how to sink or swim.
I recently saw my old friend, Allen, and as we were reminiscing about our childhood days and the time we spent at the lake, he, as he often does, retold the story about his father and the famous swimming lesson. This time, better prepared for the repeat of an old story and with the desire to torment an old friend, I said, "Allen, I asked your father about that story and he said he wasn't really trying to teach you to swim!"
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| Talking Points
- The cost and percentage return of recouped cost of adding a swimming pool to a home: $24,000; 39%. National Association of the Remodeling Industry
- "The function of economic forecasting is to make astrology look respectable." John Kenneth Galbraith
- "You make most of your money in a bear market, you just don't realize it at the time." Shelby Davis
- "The definition of a bear market is when common stocks are returned to their rightful owners." Sir John Templeton
- "In America, we are good at solving problems. We are also very good at causing the problems." Warren Buffett
- At the peak of the tech bubble in March 2000, real equity returns were 2.4 standard deviations above trend, or about 13 years of trend performance ahead of themselves, worse than in 1929. Credit Suisse Global Investment Returns Yearbook 2010
- Since 1802, the compound average annual return on stocks adjusted for inflation has been about 7%. The same average return figure holds for the post World War II era. Professor Jeremy Siegel of the Wharton School
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"Volatility breeds uncertainty; uncertainty breeds opportunity; opportunity is not a lengthy visitor." Mark Zinder
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For more information about this article, or to learn more about how I can train your team or partner with your company, please contact Jay Klahn at jay@markzinder.com or 818-889-1134.
Sincerely, |
Copyright 2009 Mark Zinder, LLC. All Rights Reserved. If you would like to reproduce any of Mark Zinder's newsletters in whole or in part please contact service@markzinder.com.
Mark Zinder is not a registered financial advisor. Readers should not view this material as offering investment related advice. Authors have taken precautions to ensure accuracy of information provided. Information collected and presented is from what are perceived as reliable sources, but since the information source(s) are beyond our control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented are not specific buy or sell recommendations and are presented solely for informational purposes. The authors/publishers and their staff may or may not have a position in the securities and/or options relating thereto, and may make purchases and/or sales of these securities relating thereto from time to time in the open market. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities and therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.
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