“It is in giving that we receive.”
– Francis of Assisi
As we approach the holiday season, I’d like to offer all of our readers my most sincere best wishes for a wonderful holiday week next week. We at Concentus are thankful to have you as part of our community, and would like to wish you a wonderful Merry Christmas, Happy Hanukkah and all the best of health, happiness, and prosperity in 2017!
Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”
– Sir John Templeton
In last month’s article, we focused on “being observant” as one of the great qualities to adopt for anyone who wants to become a great investor. This month we focus on a similar, but slightly different quality…Great Investors have a Healthy Memory
There is great wisdom in John Templeton’s quote above, as it recognizes investor sentiment as an enormously important factor in stock market cycles. In our view, long term market cycles are largely dictated by “the mood of the crowd”, and great investors are well served to pay attention to investor sentiment. To paraphrase Templeton, we have a belief that no great, multi-year bull market can begin unless the majority of the investing public is terrified of losing money in stocks, and that their equity holdings can tank at any moment, and for any reason. Alternatively, no terrible bear market can occur unless investors are complacent, and convinced that stocks can’t go down at all, and that their greatest risk in their stock portfolios is that someone else is earning bigger returns than they are.
When we turn on the TV, we’re expecting to be entertained on some level. It doesn’t matter if it’s HBO or CNBC. Now, we may not think about it that way, but producers focused on attracting eyeballs. I always remind myself that there is an entertainment element to the Financial ‘news’. It isn’t meant for investors, but for traders, people who believe speed is paramount.
“The most surprising development about the expanding world of abundance in the 21st century is that it most richly rewards those individuals who are increasingly grateful for every aspect of the extraordinary world that is being created around them. To the degree that you are grateful for what you have, you will get more of what you want.”
– Dan Sullivan, author and founder of Strategic Coach®
As we approach the holiday season, I’d like to offer all of our readers my most sincere best wishes for a wonderful Thanksgiving next week. We at Concentus are thankful to have you as part of our community!
History in the Making
I am quite certain that by now, everyone reading this has been bombarded by television, radio, and print media opinions about the geopolitical implications of last night’s election results. Although there is certainly a wide variety of opinion, one thing that we all can agree is that Donald Trump’s victory was an historic event, that has the potential to significantly reshape the landscape of our country and world in coming years.
Of course, this result also has taken investors somewhat by surprise, and many are seeking to make some sense of the implications of the election on the markets. We thought it might be helpful to provide some perspective.
The world is a wonderful place. This quarter, our ‘What A World’ segment takes a look at the upcoming Presidential Election, Fashionable Pessimism and why you should be Optimistic.
“Risk comes from not knowing what you are doing”
– Warren Buffett
In last month’s article, we focused on “humility” as one of the great qualities to adopt for anyone who wants to become a great investor. This month we focus on a similar, but slightly different quality…Great Investors Are Observant
To become a great investor, one must adhere to firm beliefs which are formed by the observation of markets over many years. In our opinion, the diligent observation of market behavior over many market cycles will reveal certain Universal Truths, or Natural Laws which govern investment markets and investor behavior over time, and which the wise investor can attempt to exploit.
“No Issue looms larger for the financial advice industry than demographics and the aging of the baby boomers.”
-Andrew Osterland: CNBC.com
Recently, enormous volumes have been written about the coming transfer of wealth which is likely to occur in the next several years, as wealthy baby boomers begin to die and transfer their wealth to their kids. The media has adopted this topic as a popular theme, and I have seen hundreds of articles like the one below from Andrew Osterland, which proclaims that:
Over the next several decades, the biggest and wealthiest generation in U.S. history will transfer roughly $30 trillion in assets to their Gen X and millennial children, and if studies are accurate, most of those children will promptly fire their parents’ advisors. [from: Advisors brace for the $30 trillion ‘great wealth transfer’]
Indeed, this coming wealth transfer event has become a huge focus for the financial advice business, which is scrambling to figure out how to court the Millennial and Gen X children who stand to benefit from these inheritances.
“A staggering fraud… A bank that is too big to manage”
– Senator Elizabeth Warren, referencing the recent Wells Fargo Bank fraud case
If you have picked up a newspaper or turned on the business news this week, you probably have seen images of the pained face of John Stumpf, the beleaguered CEO of Wells Fargo Bank. Unfortunately for Mr. Stumpf, he has spent his week attempting to explain to Congress why a massive fraud was committed on the bank’s customers under his watch.
Over the last few years, thousands of Wells Fargo employees have been opening millions of unauthorized bank and credit card accounts, in order to boost their sales figures and earn bigger bonuses. In the process, they subjected millions of customers to unwarranted bank fees and interest payments on accounts they never asked for. The result: over 5,300 Wells employees who engaged in this fraud have been fired, Stumpf stands to lose his job, and Wells is being forced to pay the largest penalty fine in history, reported as $185 million.
Part 3 of our 3-Part series in which we analyze the Value of Financial Advice, and how you can ensure that you are receiving true value for the fees you pay.