Okay, as all of you have heard me say, when I blog on subject matters related to investments, I can always take the high road and tell individuals that I am not selling any investments. So, realizing that I am not your attorney, your CPA, your financial advisor or investment advisor, when I question something it is not because of selfish interests. Now, of course, one could say, “well you ‘sell’ self-directed IRA and 401K plans” — and, that is true. But, I am not telling you what to invest your funds into. Good enough disclaimer?
So, the other morning I am at the gym working out hard (in the dry sauna) and I come across this article (“Don’t Let Inflation Scare You Off”) in the USA Today from October 31, 2011. As I started reading and soaking in how the author bemoans the stock market and raises dismal statistics of what it has done recently and historically, I get confused that he comes back at the end of the article and tells people that they will be “richly rewarded by stocks even after the hit of inflation.”
Well, it is amazing that I NEVER read anyone in such outlets tout anything other than the market….it is like they think it is against the law or a violation of some “secret handshake” to educate anyone on the fact that, if structured correctly, they CAN use their retirement assets to invest in non-traditional assets outside of the market. After reading some parts of this article, tell me if you agree with me OR am I the moron who doesn’t get it.
The article starts off with this question: “Experts often say stocks do great, in the long term. But, since the great stock crash in the 1920’s, how much has the stock market actually gained if adjusted for inflation?” Fair enough question and let’s break down the guts of the article.
The response to that question is: “Stocks have underperformed for such a long time that some investors are wondering if they’re even worth the trouble.
The article continued by stating that over the last 10 years, investors have come nowhere close to the 9 – 10% investment return they expected. In fact, when measured by the S & P 500, in the 10 year period ending September 30, 2011, stocks returned an average of 2.8%….this, according to Morningstar. Further, if that wasn’t enough of a punch in the stomach, investors had to endure the market roller coaster ride….watching the stock ticker became one of the most highly-rated TV shows each week….or felt like it anyways.
From there the article suggests that over an 80 year history of the market that annual returns when measured against inflation returned 6.7%. But, that is not what makes me confused or mad or whatever term you want to throw at it….what bugs and confuses me is this:
“But, before you throw up your hands and look at the 6.7% average annual return as proof investing isn’t worth your time, consider the alternatives.” The article in contrast to MAYBE suggesting non-traditional asset investing as a consideration, compares the stock market to other investment options…..like…..are you ready for the excitement…..YES, GOVERNMENT DEBT INVESTMENTS. Since 1928, such investments have returned an average annual return of 1.8%. Wow, let’s all dump all of our funds into the market!! I mean, if you can get 6.7% vs. 1.8%, who wouldn’t do that?! If you are catching my sarcasm, congratulations.
Look, again, I am not here to suggest how you invest your funds, but I guess it is frustrating that no one in “intelligentsia” ever speaks about non-traditional asset investing. Does such investing have risks? Of course. Does anyone, however, think the market doesn’t have risk (especially after 2008)? I would hope not. Sometimes I feel like these folks are like the hamsters that keep running on their hamster wheel….they keep talking up the same investments over and over.
The article ends with what I think is going to be an uplifting statement to really provide a “punch” to what, I believe, was an otherwise honest, frustrating and truly dismal reflection on the historical performance of the stock market…but it didn’t come. And, the following ending literally left me saying, “huh?”:
Can stocks be frustrating in the short term? Absolutely. Can they even be disappointing over a decade or more? Yes, although that’s less common. Even so, investors with balanced portfolios have, historically, been richly rewarded by stocks even after the hit of inflation.”
My common sense question….when “experts” talk about “balanced portfolios”, why do they never seem to talk about a truly balanced portfolio….one that may, possibly, include investments outside the market?
Now I know why I said “huh.”
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- Purposeful Planning Your Retirement Requires A Hitter’s Sense Of Timing
- It Takes Both Sides — If They Don’t Want You Any More — Why Make Yer Own Samiches?
- Some Random Thoughts – Some Comical Sense
- The Returns Are In — We’re Now Recommending San Diego — Numbers Making Sense
- When It Makes Sense To Refinance — Watch Out For Stealth ‘Boot’
About John Park
“Huh?” You are being kind. I would have used somewhat of a stronger response, like, “What the bleep?” but then, I don’t want to be censured on BawldGuy’s site.
I’ll take real estate any day. It just costs a few more zeros at the end, but it sure can perform a lot better, IMO.
Proportionally, it also has much lower fees and a better rate of return if good advice and boots on the ground are used.
I would have to say follow the money. All the advertising for his paper would dry up if he was to tout something other then stocks. Finding out other ways to invest would be some work, and it is easier to follow the herd.