Transcript
Well, hello, everybody, welcome to Thursday, the S&P 500 was down just a little bit today .06%. And we really had a great day in terms of our targeted indexes. Vast majority did better than the S&P 500. Today, which is spectacular. And both Value and technology did well today, which is a that’s unusual, usually one does well, and the other one doesn’t. So that’s a good sign. Lots of talks about the stimulus.
But really what I want to cover today, I’ve been getting questions about, you know, people getting a newsletter or seeing something on the TV, or what have you from a fairly famous person famous, you know, money manager predicting a big downturn. So, you know, what do we do with that? And how do we handle that? And let me let me show you something here, I think you’ll find fascinating. And this is a report from JP Morgan, given to me by a client, actually, and it’s just showing, you know, here’s this year 2021, you know, market come down and then back up. And then they’re showing, you know, these little dots are when some of these very famous money managers or economists have made different comments about what they think is going to happen. And so, you know, March 4, David Stockman said the stock market is, is heading not only for another 50% correction, but also a long L shaped bottom, rather than a quick V shaped rebound.
Well, we ended up with a V shaped rebound. March 5th, we actually purchased Apple and Microsoft for the first time. And they did fantastic. And I’ll tell you why we did that. And we have a different process, obviously. But Roubini, famous economist, says, basically, with a pandemic still spiraling out of control, the best outcome anybody can hope for is a recession deeper than that following the 2008 financial crisis. And the risk for the next great depression is worse than the original Great Depression, and it’s rising by the day. Peter Schiff, who, who is, you know, famous for calling the top in 2008. Almost the top a lot. So that kind of is why he’s was right that time too. But, you know, what the Fed is doing is extremely bearish for the US economy, and ensures that this recession, depression that you’re entering, is going to be extremely brutal, and inflation is going to ravage the economy, particularly investors and retirees. You know, so he’s here, George Soros, we probably all know, we’re going to have the worst bear market in my lifetime. Okay, so those are what I call predictions. And essentially, you know, the question I get in the emails is, you know, what are we going to do about these predictions?
Well, honestly, nothing. Because predictions are generally not correct. And so I have a different methodology, I gather those predictions, I pay attention to those predictions, I gather all of the positive things I can possibly find, to try to find a balanced set of data that I can take a look at. But really, what I’m doing is I’m reacting to the market, you know, so when the market starts first started falling here, I made some small adjustments. I moved about 5% out of the stock portion in these portfolios. And I purchased long term treasuries, which goes up when the market goes down. So that worked out pretty well. I look for things that are holding up better as the market falls. And so that’s how I saw Microsoft and Apple, they were falling a lot less than the market, I also liked their big cash position. So if we were heading for the next great depression, you know, they wouldn’t be a bad place to be. And so overall, what I’m trying to do, is to be a buy and hold investor, because that’s really what works.
Having said that, if we didn’t have the next great depression, we really don’t want to buy and hold through the next great depression. You know, the last one, the market dropped 86%, which is dramatic. And so you know, a million dollars is now worth $140,000, that was invested in the Dow, and then it took 14 years, you know, for the for the market to come back. And so I don’t have a lot of clients that can wait that long, I would make a dramatic impact to their retirement. And so I have a series of things that I would plan to do to try to, you know, protect ourselves during that downturn. Maybe I get it wrong, but I’m going to try as far as that goes. But in my opinion, you know, reacting to what the markets doing is better than executing based on predictions. Most predictions are wrong. Now, somebody could have been right there, but I’m still going to be just reacting to what the market does. And so you know, when I see something that’s very negative, you know, the markets gonna crash and all I see lots of those all the time, you can see that they’re all coming out here on a pretty regular basis, you know, back in March, and so that’s, that’s the object is, you know, don’t get too concerned about them. Understand that most predictions are wrong. And even if that one’s right, you’re better off just kind of hanging in there.
So you want to make sure you’ve got the right risk, you know, how much stock versus bonds so you can hang in there for a while. You need to be able to let the market fall some so you can tell what to do and how to react to that. You know, look for things that are going to be able to do well in that recovery. For us, that was advanced healthcare, technology, you know, all of these things, clean energy and what have you. And we’ve had an explosive recovery portion for our portfolios, which has really helped. So anyway, that’s that’s the concept predictions and executing based on predictions. And my opinion, is not as good as reacting to what the market is doing and actually telling you, so just different philosophy, different ways of doing things. But that’s, that’s the reactionary methodology that I’ve been trying to execute for quite some time now. So interesting. See what’s going to happen here talking about stimulus could be very nice for the market. We’ll see what happens going forward. I look forward to talking to you tomorrow. Thank you very much.