I think one of the most dangerous and misguided beliefs in the world of investing is that “In the long-term stocks always go up”.
I think one of the most dangerous and misguided beliefs in the world of investing is that “In the long-term stocks always go up”.

I think one of the most dangerous and misguided beliefs in the world of investing is that “In the long-term stocks always go up”.  Much of this of course has to do with how you define the long term, but, before we do that, it must be pointed out that this saying is only true of the stock market and not always individual stocks.

You need to remember that individual stocks come and go from market indexes as the weaker companies are replaced by the stronger ones. So, if you invested  in a basket of stocks that represent a market index and rotate and change these stocks when the index does, then yes “theoretically” over the long run you should make money………….as long as you never need to touch this money when the market is down.

So, I looked to Investopedia for a definition of what the long-term is.

Long term refers to the extended period of time that an asset is held. Depending on the type of security, a long-term asset can be held for as little as one year or for as long as 30 years or more.

Generally speaking, long-term investing for individuals is often thought to be in the range of at least seven to ten years of holding time, although there is no absolute rule.

Now back to the real world where stuff always seems to happen at the most inopportune time. It seems that our need for additional funds is almost always when the market is falling or at its lowest. I believe its very rare that an investor can time the market so perfectly as to get out at the top and avoid the falls.

Furthermore, in this world of instant gratification where we are upset if amazon takes 2 days to deliver. The concept of patience and investing for the long term is all but dead.

Now back to investing for the long term.

As of December 6th, the FTSE 100 which is comprised of the 100 largest, most actively traded companies on the London Stock Exchange is trading at the same level as it was in 1999.  So, in this instance the buy and hold/hope investor who bought into the myth of the long term has gone nowhere in 18 years.  Basically, this means an investor in the FTSE 100 has not managed to make a cent in this century!

Now this hurts if you are an investor with another 20 years till retirement. But what if this was your last year before retirement and you counted on the long-term gains to fund your retirement. In this case you are pretty much screwed 🙁

Bottom line an investment of $100,000 (GBP equivalent) in the FTSE 100 from 1999 is worth at best $100,000 today and if you factor in currency exchange you are even worse off.

That said an investment in FTM Class A, had it been publicly available (please indulge me for a moment) would have grown to $424,072.19 during the same time. This is without any negative months or sleepless nights, but best of all this would have happened if the market went up, sideways or down as there is no correlation to the market at all.

So, I wondered if this was the only instance of betting on the long-term messing with an investors retirement plans?

From 1968 to 1984 The S&P 500 went nowhere leaving investors to tread water for 14 years.
Once again lets compare a $100,000 investment in the S&P 500 for 14 years going nowhere as opposed to an investment in FTM Class A, which would have grown to $301,860.92.

Or consider.

An investment in the S&P 500 of $100,000 in 2000 was worth a whopping $100,000 by 2013.
Using FTM Class A, as our benchmark it would have grown to $277,267.31

Now before you bring out the torches and pitchforks accusing me of not comparing apples to apples. You are right, FTM was not available then……..But, it is now. And now is the only time you can make a decision to build a better brighter future.

If you are wanting those golden years to be relaxed and fun filled as a reward for a life spent working hard. Then perhaps it’s something that needs serious consideration.

It’s also worth considering the findings of a report from Deutsche Bank that 89% of the world’s assets are in negative territory so far in 2018 – in dollar denominated terms.

There was also an interesting article from JPMorgan Asset Management where they advised their clients that Cash isn’t only a safe place to invest, it now offers a better risk-adjusted return than equities.

So, if cash is a better bet than equities, most assets have gone nowhere this year and buy and hold for the long term doesn’t always work. Then maybe you need to think outside of the box a little 🙂

Unless you have been living under a rock, you know that the stock market has gone from the hero of 2018 to the villain.  As I write this on the 13th of December the Dow is -0.78% for the year despite a strong start in January and if you held for the last year you are up 2.04%. If you look at the same on the S&P 500 you are -0.84% for the year and positive 1.51% for the past 12 months.

Of course, this could all change tomorrow and I never claimed to be smart enough to guess the direction of the market. Just that I prefer slow, steady consistent gains over hoping that in the long-term things will just magically work out.

Honestly, it’s not my job to beat you over the head with a big stick until you get it. Instead just take an open, unbiased look at your investment returns and if they are not what you would like them to be. Then maybe…….just maybe, you need to consider doing things a little differently.

FTM ended the month of November and the year to date with the following.

FTM Class  A     0.76%  November and 8.29% year to date

FTM Class B      0.36%  November and 4.84% year to date

FTM Class C      0.83% November and 9.69% year to date

FTM Class D      0.83% November and 9.16% year to date (simple interest)

So, if you are sick of the market volatility and sleepless nights worrying about your nest egg. Then isn’t its time you took a closer look at FTM.

FTM generates the same returns irrespective of market condition or direction. It uses no leverage and has no correlation to the market. Making FTM the perfect way to grow your nest egg month in and month out.

This month I have included a link to our fact sheets to download the fat sheets visit https://ftm-investments.com/fact-sheet/

Article by Endre Dobozy


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