Investments and our Ever-Changing World

Nov 2017


The other day at the dog park I was approached by a man who appeared to be in his early to mid-70s. The gentleman told me he was not happy with a couple of my recent columns. Of course, I asked him what he disagreed with and he explained to me that he sells annuities and was not happy with my current thoughts about annuities. He of course went through all the benefits of annuities, and I almost thought I was listening to an infomercial. After he finished explaining the benefits to me, which I was well aware of, he then said that he remembered listening to my radio show in the 90s where I recommended annuities. He looked at me and said, how can you recommend annuities then and not today? I looked him in total disbelief and said, yes, I did recommend annuities back in the mid-90s. I then said he should check his calendar because we’re no longer in the 90s.

This gentleman highlighted a mistake that many investors make. They make the assumption that if something was good in the past it is good today; that is no longer the case. I’ve been in the financial world for over 30 years and during those 30 years my recommendations have changed dramatically. After all, our environment has changed dramatically since the mid-90s. Not only do we have thousands of changes to our tax laws but our economy looks totally different as well. After all, back in the 90s the internet was in its infancy stage and no one heard of Facebook or social media. In addition, the world economy was different. If I would have told someone in the 90s that General Motors would sell more cars in China than they did in the United States, they would say I’m crazy; however, today that’s the reality. We may not like all the changes that have occurred in our world; however, as investors we must recognize them when it comes to our portfolio.

In too many situations investors do things because that’s what they’ve always done — that is a mistake. As investors, when we invest money, no doubt we should look at how investments we are considering performed in the past; however, our main focus has to be the future. For example, at one time certificates of deposits through banks paid a fair return and were a good place for conservative investors to park some of their money. That is no longer the case today. CD rates today no longer keep up with the cost of living. Therefore, the safe investment that once protected the purchasing power of your money no longer does.

If you went back to the 90s you would see the mutual funds that I recommended such as Janus, Fidelity Magellan and American Century Ultra. At one time these were great funds, but they stopped performing. When they stopped performing, I stopped recommending them. My philosophy is that I have no loyalty to any investments and ultimately, I’m going to judge them on their performance. That doesn’t mean if they have a bad year I’m necessarily going to get rid of an investment; however, when they have a string of bad years it’s a sign that changes are needed. Unfortunately, the gentleman I was speaking to, because he sold annuities, was loyal to annuities no matter what. As far as I’m concerned, this highlights one of the reasons why I always tell investors to be skeptical when they deal with commission salespeople. In too many situations, the salesperson is loyal to the product and not the investor. In my situation, my focus is 100 percent on the investor, not on the investment. As far as I’m concerned, investments are a tool to accomplish an investor’s goal.

When it comes time to invest your money, don’t automatically do what you did in the past. Do what makes sense for your current situation and your current goals and objectives based on the world that we live in today. It is a mistake and it could be a very costly mistake for investors to live in the past. Every industry and every business has to change to survive in today’s ever-changing world. The same thing applies to investors. For investors to succeed and accomplish their financial goals and objectives they can’t keep their heads in the sand; they need to accept and adapt to the world that we live in today and, in addition, they must be flexible enough to continue to make changes and adjustments based upon the ever-changing world that we live in.

Good luck!



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