Ignore the Hype. Brian Perry

Ignore the Hype - Brian Perry


Скачать книгу
the entire two decades and saw her $100,000 initial investment grow fourfold. On the other hand, Figure 2.5 shows that Tarzan missed the 60 best days during that period and saw his $100,000 drop by more than 70%! Keeping in mind that there were approximately 5,000 trading days during those 20 years, the difference between participating on 100% of those trading days versus participating in 99% of those trading days was $370,000!

A pie chart depicting how Jane's 100,000 dollars initial investment in S&P 500 grew fourfold for the entire 20 years and how Tarzan missed the 60 best days during that period and hence his $100,000 dropped by more than 70 percent.

      SOURCE: Analysis by Brian Perry. Returns provided by JP Morgan Asset Management with data from Bloomberg; time frame 1998–2017.

      What do you think? Would an extra $370,000 one way or the other have an impact on the quality of your retirement? Again, keep in mind that Jane and Tarzan had the same time horizon and invested in exactly the same thing. The only difference was that Jane stayed the course and Tarzan did not.

      Let me ask you a question: When do you think the best trading days have occurred? Have they been during robust bull markets as stocks powered ahead? Did those magic days come following great economic news or reports of strong corporate profits?

Ranking Date % Gain
1 3/15/1933 16.61%
2 10/30/1929 12.53%
3 10/6/1931 12.36%
4 9/21/1932 11.81%
5 10/13/2008 11.58%
6 10/28/2008 10.79%
7 9/5/1939 9.63%
8 4/20/1933 9.52%
9 3/24/2020 9.38%
10 3/13/2020 9.29%
11 10/21/1987 9.10%

      SOURCE: Analysis by Brian Perry. Data courtesy of S&P Dow Jones Indices LLC.

      And that brings me to another point. I've heard many people (presumably non-Chinese speakers) say that the Chinese use the same written character for both crisis and opportunity and that, therefore, “crisis equals opportunity.” In fact, I used this slogan in dozens of presentations over the years before discovering that it is in fact not true. Nevertheless, there's merit to the concept so I'm sticking with it, because as investors, crisis can equal opportunity, and bad news can be your best friend.

      When you are in the accumulation phase of your financial life, a crisis and the falling prices it presents allow you to accumulate additional shares while they are “on sale.” In effect, falling markets help you to dollar-cost-average your portfolio, as your (hopefully) systematic contributions to retirement and other investment accounts purchase stocks at reduced prices.

      The concept remains valid once you've retired and entered the distribution phase of your financial life. That is because you should be systematically rebalancing your portfolio during market declines, which means that you'll be selling assets that haven't fallen too much in value and using those proceeds to purchase additional amounts of the most beaten down assets. This is another form of dollar cost averaging, and although adhering to this discipline requires a level of mental fortitude, the results can be worth it, because the more stocks you can buy “on sale,” the better off you'll ultimately be. And keep in mind that, even in retirement, many of your assets are ultimately earmarked not for next month or next year but rather for a decade or more into the future.

      Sadly, many people lack the discipline to set and follow an appropriate strategy, so let me repeat myself one more time: don't swim against the tide. Be disciplined. Let the long-term upward trend of markets propel you to your financial goals.

      Or, instead, you could try to successfully trade based upon forecasts of what the future holds. So now let's shift our attention and take a closer look at how well that strategy has historically paid off.

      Конец ознакомительного фрагмента.

      Текст предоставлен ООО «ЛитРес».

      Прочитайте эту книгу целиком, купив полную легальную версию на ЛитРес.

      Безопасно оплатить книгу можно банковской картой Visa, MasterCard, Maestro, со счета мобильного телефона, с платежного терминала, в салоне МТС или Связной, через PayPal, WebMoney, Яндекс.Деньги, QIWI Кошелек, бонусными картами или другим удобным Вам способом.

/9j/4AAQSkZJRgABAQEBLAEsAAD/7SIeUGhvdG9zaG9wIDMuMAA4QklNBAQAAAAAAAccAgAAAgAA ADhCSU0EJQAAAAAAEOjxXPMvwRihontnrcVk1bo4QklN
Скачать книгу