Over the last few weeks, professional financial planners have been fielding calls from clients who are asking the kinds of questions that every professional investor hates to hear. The Dow has reached (and then fallen back below) 20,000. Should I take money off the table?
My preferred candidate didn’t win the election, and I think the world is going to hell in a handbasket. Don’t you think I should sell my stocks now before it’s too late?
Continue reading How to Reset Your Portfolio (Regardless of What You Think of the Markets)
Remember Brexit? Of course you do. Many short-term traders thought the sky was falling when British voters unexpectedly decided to opt their country out of the European Union. But the process of extricating the British economy from the complexities of European membership has been deliberate and thoughtful—on both sides.
Continue reading Brexit Update
With the benefit of hindsight, we can see that it would have been a bad idea to sell your stock holdings after the Brexit vote; you would have locked in a 5% to 10% loss in a market that eventually trended upward to new record highs. The same is true of the aftermath of the World Court decision that slapped China in the face by declaring that man-made islands don’t transform an ocean into territorial waters, the attempted coup in Turkey, or, really, any other alarming headline which doesn’t materially affect a company’s ability to run its operations.
Continue reading Riding the Coaster
If you watched the popular Forrest Gump movie, you may have noticed that moment when the perplexed young man opened his brokerage statement and noticed that a big chunk of his shrimp operation profits had been invested in (as he said) some kind of fruit company. He had opened a brokerage statement and comically misinterpreted the iconic Apple computer logo.
The movie was released on July 6, 1994, when Apple Computer stock was trading at 93 cents a share. Recently, a commentator looked at what Mr. Gump would be worth today if he’d held onto his shares through last February, when the column was written and the stock price had climbed to $128.66 a share. The stock split 2 for 1 in June 2000 and again in February 2005, and split 7 for 1 in June 2014, so every $1,000 investment would have grown to $136,894—an increase of 13,589%. A $100,000 investment, which seems more likely (by that point in the movie, Gump had become a millionaire, with his picture on the cover of Fortune) would simply add a couple of zeros to the terminal value.
This may be the most extreme example in history of a single stock rewarding its shareholders over a long holding period. Does it make you wish you had a working time machine?
About the Author: Bob Veres has been a commentator, author and consultant in the financial services industry for more than 20 years. Over his 20-year career in the financial services world, Mr. Veres has worked as editor of Financial Planning magazine; as a contributing editor to the Journal of Financial Planning; as a columnist and editor-at-large of Dow Jones Investment Advisor magazine; and as editor of Morningstar’s advisor web site: MorningstarAdvisor.com.
Mr. Veres has been named one of the most influential people in the financial planning profession by Investment Advisor magazine and Financial Planning magazine, was granted the NAPFA Special Achievement Award by the National Association of Personal Financial Advisors, and most recently the Heart of Financial Planning Distinguished Service Award from the Denver-based Financial Planning Association.