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Random Market Nuggets - Labor Day Edition


Alright, we are looking at the unofficial end of summer with Labor Day upon us.  So, how about I share some random knowledge.

  • The Dow Jones ended 1964 at 874.  17 years later it ended the year 1981 at 875.  Ouch!

  • Since late January of 2018, the S&P500 is up just 1.74%.  This number is subject to change based on White House tweets.

  • There was a survey on Twitter recently asking if you refer your family to advisors who charged commissions, fees based on assets under management, a general fee-based approach, or a retainer model.  The response was 58% in favor of a retainer model.  Good news for me as my flat-fee falls under a retainer model.

  • Money is not a currency.  It is purchasing power.

  • Account churning still happens.  This is when a fake financial advisor trades too frequently in a client’s account.   Advisors paid based on activity in an account (ie – get paid per trade/purchase) are usually the problem.  Merrill Lynch recently paid a $40 million settlement for churning in one client’s account.  They are looking at another claim of $42 million. How the hell do $82 million of trading fees happen and no one in charge bats an eye?!?!

  • 1.3% of the world’s public companies account for all the world’s market gains in the last three decades. This is 811 companies out of 62,000. Apple, Microsoft, Alphabet (Google), Amazon and Exxon Mobil were responsible for 8.3% of global wealth creation. Here is a great article from Barry Ritholtz that dives more into the data.

  • Single best performing stock of the last twenty years is…Monster Energy Drink.  It is up almost 450,000%.  As Eddy Elfenbein describes it – “A product specifically designed and marketed for abject morons.”  Wait, one of my teenage sons drinks that!  My bad, teenage boys and abject morons often mean the same thing.

  • In March of this year the market said there was a 3% chance of a Fed rate cut in July.   On July 29th the odds were 100% in favor of a cut.  In the words of Ferris Bueller – “Life moves pretty fast.”

  • There was a poll of 25,000 investors across the globe earlier this year.  One of the most astounding findings was 16% of respondents said they expect to have returns of over 20% annually for the next five years.   Good luck with that considering the average investor has averaged annual returns of just under 2% the last 20 years. Also, see note above about flat returns since late January 2018.  Also, also, are these same 16% the buyers of Monster Energy Drink?

  • You can’t turn around without an article talking about a “pending recession.”  Fact is one may be coming soon, but no one really knows for sure.  These articles remind me it is more important to focus on things within your control than those completely outside of it.  You do NOT control the market, the economy, the weather, and whether your favorite team wins.  You can and SHOULD focus your control on things like your spending and savings rates, how much you pay in fees to your advisor, keeping taxes as low as possible, and how often you wash that “lucky” jersey.

With that, enjoy the rest of the summer and impress some of your friends over the BBQ with this random information!