NOT!
If you watch and listen to the media hype they will give you all of the data they have mined out of the negative statistics they can find and show you how we are headed for the second great depression. I have done my own research and have found the real truth about what is currently the state of affairs with the markets.
Lets take a look at then versus now.
First of all lets take a look at the GDP or the amount of products produced and how much it is up or down. During the depression the GDP was down an average of 27%, currently we are up .5% thats a big difference if we are headed for a depression. Hmmmm.
Second wholesale production during the depression down 52% currently we are down 2% thats a big difference if we are headed for a depression. Hmmmm.
Third unemployment a big factor in the economy infact probably the largest influencer of spending in the economy during the depression was 37% that was during the time when the largest employers were manufacturers. Currently our unemploynment is 7.2% in a mostly service economy. Another big disparity versus the depression. Hmmmm.
Fourth factor the CPI or Consumer price index during the depression was -27% currently we are at a plus 4%. Wow big difference huh. Hmmmm.
Fifth factor, bank failures during the depression 44% currently we haven't had any because there are systems in place protecting us from bank failures which were instituted because of the Great Depression.
Sixth Factor, how about US Exports. During the depression we were at -66% Currently we are at + 15%.
The fact is that The Great Depression taught us how to deal with down economic markets and how to improve them and there are systems in place to hold up the market. So the real issue is how to deal with the psychological side of the down market because if you can deal with that then you can stomach the ups and downs the market throws at us. It is for this reason that the market is unpredictable and we can't control it that I have chosen to coach clients through these times so that they can reap the rewards that the market will pay back. We should look at times like this as prepaying for the lobster dinner that we are about to consume, and be happy about that.
If you are interested in more information on how I work and how I can help you through these tough psychological markets you can call me at 610-977-2422 or email me at roy@yourwealthadvocate.com.
You can always visit my website at yourwealthadvocate.com for the latest videos and information concerning the market.
Thursday, January 15, 2009
Thursday, January 8, 2009
Diversification on Steroids
Are You Diversified?
Some savvy investors think that because they have allot of stuff that they are adequately invested in the market and diversified. But have they really checked their portfolio to make sure that their holdings are correlated with dissimilar price movement and that they are in every sector and market that they possibly can?
Don't let the media and brokers talk you into an investment (ie. mutual fund) and convince you that this investment gives you diversification and safety. Most mutual funds are unsuccessful in fact 85% fail. In 2008 FIDELITY MAGELLAN Fund, one of the premier mutual funds in the country was down 50%, so even the most respected and previously successful funds have had problems last year.
Harry Markowitz who wrote his doctoral thesis in the 1950's and won the Nobel prize for it in 1990 came up with Modern Portfolio theory. The basis for his theory was that through proper diversification and negative correlation you can reduce risk by combining these strategies and that you can make your portfolio a more efficient and predictable.
A structured portfolio composed of no load indexed mutual funds consisting of over 14000 holdings in 39 countries is what you need to accomplish thourough diversification. We take this one step further by looking at several other variables promoted by academics of the markets and implementing them as well. My clients are enrolled in such a program and are on the road to getting peace of mind with their investments and money and to leading an abundant life as opposed to one of scarcity. This is what I help them succeed in as a coach.
In order to know if your portfolio is properly diversified and to access the amount of risk, you will need to analyze it using the Free Market Investment Analysis. From this you can determine the specific risk or standard deviation (a measure of risk)for your portfolio. Then you can look at the asset categories which comprise it and determine if the risk is justified for the returns you are getting. Or, if you can improve your situation by either reducing the risk for the same return or increase returns for the same amount of risk.
If you are interested in looking at your portfolio to see if you are getting the returns you deserve based on the amount of risk you are taking you should call my office for a Free Market Investment Analysis.
For more information about these and any other services I provide visit my website at http://www.yourwealthadvocate.com/ or call me at 610-977-2422.
Some savvy investors think that because they have allot of stuff that they are adequately invested in the market and diversified. But have they really checked their portfolio to make sure that their holdings are correlated with dissimilar price movement and that they are in every sector and market that they possibly can?
Don't let the media and brokers talk you into an investment (ie. mutual fund) and convince you that this investment gives you diversification and safety. Most mutual funds are unsuccessful in fact 85% fail. In 2008 FIDELITY MAGELLAN Fund, one of the premier mutual funds in the country was down 50%, so even the most respected and previously successful funds have had problems last year.
Harry Markowitz who wrote his doctoral thesis in the 1950's and won the Nobel prize for it in 1990 came up with Modern Portfolio theory. The basis for his theory was that through proper diversification and negative correlation you can reduce risk by combining these strategies and that you can make your portfolio a more efficient and predictable.
A structured portfolio composed of no load indexed mutual funds consisting of over 14000 holdings in 39 countries is what you need to accomplish thourough diversification. We take this one step further by looking at several other variables promoted by academics of the markets and implementing them as well. My clients are enrolled in such a program and are on the road to getting peace of mind with their investments and money and to leading an abundant life as opposed to one of scarcity. This is what I help them succeed in as a coach.
In order to know if your portfolio is properly diversified and to access the amount of risk, you will need to analyze it using the Free Market Investment Analysis. From this you can determine the specific risk or standard deviation (a measure of risk)for your portfolio. Then you can look at the asset categories which comprise it and determine if the risk is justified for the returns you are getting. Or, if you can improve your situation by either reducing the risk for the same return or increase returns for the same amount of risk.
If you are interested in looking at your portfolio to see if you are getting the returns you deserve based on the amount of risk you are taking you should call my office for a Free Market Investment Analysis.
For more information about these and any other services I provide visit my website at http://www.yourwealthadvocate.com/ or call me at 610-977-2422.
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