Dear Patient Investors:                                  


Playing the Probabilities

S&P 500 1926-2015


Another newsletter equated investing in U.S. stock markets during 2015 to riding a mechanical bull. The markets bounced up and down, but when the year ended, investors were almost where they had started.*

No-one can possibly know all the variables that affect the prices of stocks, but many people try.  An antidote to the endless musings of these “experts” on daily media shows can be found by concentrating on the fact that the longer you hold a basket of large US companies, the more likely you are to see a positive return (see chart).  We are happy when the price of products we buy stay level or reduce because we are certain it will not last forever.  The same thinking should be applied to the purchase of stocks, the companies providing all those products. 

Years ago I taught in the public schools and then I had the opportunity to supervise student teachers from the University for four years.  Over and over I found that the orderly classrooms had few rules, but they were consistently enforced; that allowed for a pleasant learning environment while chaos reigned in other classrooms where many rules were posted or discussed, but could not be enforced. Parallels exist in our tax system and regulatory environment.  Many clients who have retired in recent years became exhausted with the environment; they no longer had a job they recognized as the one they once loved.  They spent their time filling in reports. 

During presidential election years we will see data showing that the US stock market has done similarly well on average during all administrations.  Whoever is elected – I hope they sincerely reform and simplify the tax code and simplify and reduce all regulations.

In the meantime, investing in stocks is the broadest and simplest way to build a nest egg which will provide a pleasant retirement.  It is wise to remember the prices of good stocks can double many times as the years go by, and dividends can do the same.  Fixed income products do not. It is hard to appreciate the long term benefit of equities when bonds provide comfort for short term volatility, but over the long term that simple fact is all the difference in the amount of money accumulated.

Enclosed are account summaries dated 12-31-2015. Please call us if you would like to schedule a review or have questions.

We recommend adding to your accounts whenever you have the funds available. 


Sincerely yours,   


Louise Googins



* Peak Advisor Alliance