Taking Control Of Your Financial Future
The Dynamic Wealth Report
January 3, 2012
by Corey Williams, Editor
2011 went out with a whimper.
After a tumultuous year that saw the S&P 500 as high as 1,370 and as low
as 1,074, the S&P ended the year exactly where it started.
I’m not exaggerating…
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The S&P started trading on January 3rd at 1,257 and it closed at 1,257
on December 30th.
With one trading day to go, the S&P stood at 1,263. But stocks limped to
the finish line on the last day of trading with exactly a six point loss
to finish the year unchanged.
Now don’t get me wrong, a six point increase in the S&P amounts to less
than a 0.5% gain… but it’s still a gain. After all of the ups and downs,
a gain (no matter how small) would at least give us something to hang
our hat on.
Unfortunately, that’s the good news.
The bad news is the majority of mutual funds lost money this year.
According to Lipper, 92% of the 8,036 funds they track are down for the
year. And the average loss for stock funds is 4.1%.
As an investor, that just doesn’t cut it.
I don’t know about you, but I want to make money on my investments…
every year. I work too hard for my money to only get a positive return
in years where the entire stock market goes up.
Seriously, the S&P has been down or flat five out of the last twelve
years. I won’t accept not making money nearly half the time. And neither
should you…
But that’s exactly what old guard money management firms like Vanguard,
Fidelity (FNF), and even major brokerage houses like
Morgan Stanley (MS)
tell you to do. They still subscribe to an investment model that doesn’t
work.
I’m sure you’ve heard of it. Save more, spend less, invest in
diversified portfolio, and buy and hold stocks for the long term.
For instance, I follow Vanguard Group’s Twitter feed. They’re constantly
posting “helpful” investment tips like… “Lucky enough to get a year-end
bonus or salary increase? Consider upping your #retirement plan
contributions. #savemore”.
And they also sent out this gem, “What you CAN control in 2012: having a
#financial plan & asset mix that fits your risk tolerance & goals,
putting away as much $ as you can.”
Look, that’s great and all but it’s complete garbage.
Let me give it to you straight…
Even if you pinch every penny, live below your means, and invest in
diversified mutual funds, you’re not going to have the type of retirement
you want. Sorry to break it to you but it’s the cold hard truth.
Buy and hold as an investment strategy is dead.
You just can’t put your investments on autopilot anymore. It hasn’t
worked for more than a decade and it’s not going to start working again
anytime soon.
But the old guard investment firms can’t accept reality. They’ve staked
their reputations and businesses on buy and hold. So they’re going down
with ship.
The good news is… you don’t have to sink along with them. There’s still
time for you to jump in a lifeboat.
Here’s the deal… if you want to retire someday, you need to take control
of your investments. You simply must actively manage your portfolio.
I’m talking about identifying good investments. Then putting your money
to work in those investments. And then managing the trade.
For example, if you had invested in Chipotle Mexican Grill (CMG), who’s
entire business consists of making burritos, you would be sitting on
gains of more than 50% for the year. That’s infinitely better than the
S&P’s 0% return or the losses the majority of mutual funds racked up
this year.
The point is investing selectively in a few good stocks like CMG or even
actively managing a portfolio of ETFs is better than buy and hold.
Stop listening to the old guard investment firms. They’re spending
millions of dollars every year to convince investors that buying and
holding a diversified portfolio for the long term is the only way to
make money in stocks.
If you’re ready to take the leap to ensure you can retire someday, but
you’re still unsure how to find the right investments… you’re in the
right place. We’ll be here delivering unbiased investment ideas every
single day. And we’re committed to making 2012 your best year yet.
Good Investing,
Corey Williams
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