Wow, another Mother’s Day. They can really get to you, especially when your Mom is 92 and everyone else of her generation in the family is gone.
Things my mother told me… and some she didn’t
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Tag Archives: S&P 500
Selling on impulse
Let’s discuss impulse buying. Studies show that impulse buying is based on fear of loss,
urgency, and what I call Jones-ism. The threat of losing an opportunity, the immediacy of the threat, and keeping up with the Joneses can all lead to impulse buying.
That’s impulse buying—but doesn’t impulse selling tend to arise from the same motivations?
As is the case every quarter, a small percentage of clients close their accounts. I was surprised, however, this last quarter that a number of these clients had only been invested with us for less than a quarter. Almost 19% had been with us less than a year. 55% of the terminations were from clients starting since the end of 2011—just fifteen months ago. These clients left us in a quarter that saw the stock market post gains and most of our strategies post very good results.
Markets hit new highs
Finally, on the last trading day of the first quarter, the S&P 500 Index was able to make a
new all-time high. It took five and a half years to surpass its October 9, 2007 high and was cause for celebration on the news channels and publications.
We were glad to celebrate with everyone else, but the event was slightly saddening: after five long years of a roller coaster ride, Buy & Hope investors were finally even. Though true, it did not have to be that way.
Active management offers a real alternative that strives to avoid or minimize large losses. By missing the major part of a decline, less of the next advance is devoted to break even.
In the graph shown, the S&P 500 fell 50% from 1/8/08-3/9/09. With a Buy & Hope approach, a $100,000 portfolio would suddenly be worth just $50,000. More bad news: it will take a market gain of 100% just to recover the losses to returning to break even.
Market update
No surprises here this week. As we suggested last Monday, stocks continued to weaken (down the most in five months but just 2.12% in the scheme of things on the S&P) as they hit a short-term top, while gold bounced off the bottom put in place last Monday.
Did you forget?
We all get busy.
And the media seems to be blaring new headlines at us every day about events that literally take our breath away.
Twins
Any thoughts that the stock market was going to extend its rally were shortened last week by a truly horrendous jobs report. In an economy that needs 250,000 new jobs each month just to replace retirees, we only had slightly more than 80,000 in March. The economists’ expectations were bunched around 200,000, so the disappointment in the air was palpable when the market opened and swiftly sank 150 points on the Dow Industrials.
Finally
With a headline like that, I could be talking about my Law School Alma Mater, the University of Michigan, making it back into the Final Four for the first time since 1993 by beating the University of Florida in the NCAA South Regional basketball Finals yesterday. Or it could be the exclamation of most Michiganders with the first sunshine-filled days this weekend since spring had sprung earlier in March (yes, the ice also finished melting on our lake this week…finally).
Spring thaw
The first thing you notice when you are landing at Detroit Metro Airport in the winter after two weeks in the Caribbean is whether or not there is snow on the ground. I am pleased to report that other than a few clumps left by the snow plows or swept by the wind into the empty furrows and fenced-in corners of a farmer’s field, the six inches that covered everything when I left have largely disappeared.