10th January 2020
Welcome to Ireland’s award-winning investment and financial planning Blog & Podcast. As our final Blog of 2019 I have given a lot of thought about what message I would love to share. I have imagined that this was the last ever thing we write, and reflected on what we’d want to share. By the way, unless I unexpectedly die over the holidays it won’t be the last ever piece – which you may or may not see as a positive!
Last week’s piece was about market timing for investors, and how in reality it is impossible for investors, experts and ‘bull-artists’! Indeed, since we published last weeks’ Blog Global Equtiy Indices are up approx 1.5%. But we just ignore that, we keep doing what we were doing – sit there and stare out the window – I’d be suggesting you do the very same thing if the returns were going the opposite direction. What markets do on a daily, weekly, yearly basis should not alter your plan, ever.
This Blog here shares a related, yet broadly unknown message. That message is based on fact, not conjecture nor conceit, not predictions nor philosophy! In this short piece I will share with you how market values stand today versus where they were when you were born!
I share these numbers in order to put the growth rates of equities in context. I hope that it will allow us to step above the ‘madness’ and the ‘stuff’ that we hear about investing, whether that is personal or business cash, or through our pensions. There are obviously very complex workings around each of these things. However, the thing that has the greatest impact on our lives, and the reason we all invest, is to end up better off than we were at the outset, right!? So, in essence we can boil this down to 2 numbers, the one at the start (your birth) and the one at the ‘end’, today!
The Constant Upward Curve:
Over the course of 2019 we have drawn attention to the fact that on average Equity Markets have experienced intra-year temporary declines of almost 14%. That is customary, expected and perfectly normal volatility for and temporary declines for a well diversified index of hundreds and indeed thousands of individual commercial companies. Despite those average temporary declines such indices have delivered annual long term returns in the positive double-digits.
Equity Prices Then Vs Now:
I am about to share with you the long term returns of the S&P 500. I fully accept that this is only 1 index or measure of large-scale market returns, but it is the one which most of us are familiar with, so will use the data from it. If I tell you that the annual average rate of return over the long term has been 10%+ for Global Markets, it will sound fairly decent. However it kinda lacks any tangible sense to it. However, when we hear what a market index stood at on the day of our birth it has an entirely different feel to it!
As we all know, the average rate of return can be very different over different period of time. For that reason I have selected 6 different period of time over the past 80 years. The first number is the potential year of your birth :). The second number is the price of the S&P 500 index in the year of your birth, the third is the value as of mid December 2019.
1990 (you are around 30) 339.97 – 3.150
1980 (like me – you’re approx 40!) 110.90 – 3,150
1972 (you are in your 47th year) 103.30 – 3,150
1966 (you are in your 53rd year) 93.32 – 3,150
1959 ( you are in your 60th year) – 55.62 – 3,150
1942 (you are in your 78th year) – 8.92 – 3,150
That’s all I have to say on the matter.
Feb 9th 1980:
I recently received a gift, unlike any I’d received before. It is a framed page from the Business & Finance section of the Irish Times on 9th Feb 1980, the day I was born.
Even back in 1980 the papers knew what readers wanted to read – drama! Hence one of the headlines on the page being ‘Share prices go into reverse’. Nothing ever changes. Whenever you read such headlines, do yourself a favour, turn to the sports or literature section, turn on the radio, heck don’t just do something, sit there!
A 2020 Seminar:
Oh, we are currently arranging and finalising the inaugural Informed Decisions seminar! It is designed for business-owners, consultants and those approaching or in retirement.
We will deliberately be limiting the seats to 25. We have a desire to ensure we get to meet and chat with all that go to the time and expense to attend. This is our effort to connect with, and share some deep insights with those that are really interested in attending. The focus of the concise and practical seminar will be on giving you insights on converting business success to personal wealth. And then once we’re out of full-time employment proven strategies to maximise the life-long income they generate for themselves through equity investment.
The seminar will most likely happen on a Saturday morning in February (around the time of my 40th!) in a stunning venue that will be convenient to Dublin and for anyone that may wish to travel from a little further afield. This is not a money-spinner for us. This seminar will be value for money.
You won’t leave with fistfuls of useless key-rings and flyers that’ll become landfill once they make their way out your ‘odds and ends’ drawer at home! What you will leave with may be some ideas that will result in you achieving better financial outcomes over the course of your life.
Clients that already work with us will obviously be invited as a guest of ours. I will send a mail to all on our mailing list when it is live and tickets are available to purchase – if you haven’t then sign-up to the email newsletter. Go to the bottom of our home page and pop in your email here in the sign-up box.
Finally, I want to express my gratitude to you dear listener, for giving me your time and care. I dearly hope that my weekly ramblings and often-times glaring errors have been sprinkled with the occasional nugget that has benefited you.
If you would like to get in touch to learn how we can help, please complete the form below and we will be in touch in confidence shortly.