The financial media say stocks are “volatile” and “risky” and bonds offer “stability” and “safety”. They say that limiting volatility and risk is an important goal for all investors, and especially retirees. They say “protection of principal” is of the utmost importance, especially as one moves from working years into retirement. We take a very different view.

In May of 1932, Dean Witter wrote, “Some people say they want to wait for a clearer view of the future.  But when the future is again clear, the present bargains will have vanished.  In fact, does anyone think that today’s prices will prevail once full confidence has been restored?” A few weeks later, the market turned, ending the worst bear market in history.

We are caught up in a nerve-wracking time.  But it is not the first, nor is it likely to be the last.  We feel that ‘a good investor’ is probably 50% emotionally controlled and 50% market knowledgeable.  And life could be worse.

Since there are too few people exclaiming about the wonderful results in stock market accounts, I will continue.  2019 provided returns for many equity investors of at least 20%.  The significant fact behind all of this is that the stock market has records going back to the late 1800’s and every time one looks at long term results from however one wants to identify “long term”, the results are excellent – especially in comparison to bonds. 

Observing reports on the stock market is like watching a phony boxing match where the punches do not actually land on the other boxer. The media declares WORRY and the market reacts. In a day or two, the market bounces back and frequently sets a new high. However, the media does not care about rising markets, low unemployment rates, increasing earnings or low interest rates.  Instead they warn you “The sky is going to fall!!”

A week or so ago, the markets were bouncing along at all time highs and the media was warning us of problems. “The market is over-valued”, “The market is too high.”  Sure enough, the market dropped significantly one day but climbed back in the following days.  This has been repeated many times over the market’s history. “The market climbs a wall of worry.”

Carson Bieber is Googins Advisors’ new full-time employee.  He graduated from the UW Madison in May 2019 with a degree in Personal Finance and Financial Planning.  As an intern here since late 2017, we asked him to join us.  

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