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Benefits from the Great Bull Run

You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future.” – Steve Jobs

Lately I have been wondering how many people have reaped benefits from the Great Bull Market that began in 2009.  My sense is not very many.  Yes, everyone owning stocks since 2009 certainly should have enjoyed outsized gains in their investments.  But have they really benefited as much as they should have or could have?  I would say most definitely have not.

To illustrate my concern, I thought it would be useful to show how the market actually did since March, 2009.

Lines on a graph may not mean very much so I thought it would be useful to play a game. The game is about what “coulda, woulda or shoulda” have happened in terms of your net worth.

Let’s say you had $100,000 invested in equities in March of 2009.  Assume you never added money and that you reinvested the dividends. For our purposes let’s assume the future value of the $100,000 was indexed to the S&P 500.

Without having added a single dollar, the value would have grown to $681,280.07.

Why is it that no matter how well the market performs so many do not reap rewards accruing to long term investors? The single biggest reason is they consumed [spent] too much and invested too little. The other big reasons include procrastinating and fear.

Look around you.   Almost everything you see used to be money. Most of what you see was probably important at the time of purchase or at least it may have seemed to be.  Most people, when they look at possessions, often feel buyer’s remorse especially after the initial excitement vanishes. It is too bad the cycle tends to repeat itself.

Over the time period shown in the graphs we could name numerous reasons why it was really NEVER a good time to be invested in equities. But history shows us it was actually ALWAYS a good time if impatience and fear had not been allowed to be the biggest factors in decision making.

In order to endure and achieve financial security we consistently ask our clients to understand why buying high quality equities and holding them for long time periods provides long term growth.  In spite of history supporting our point of view, many do not act.

Combined with the compulsion to spend and fear of short-term declines, people naturally procrastinate to maximize short term gratification [consumption] and to avoid fear. They form a “deadly” combination of forces that make achieving financial security so difficult. It is especially frustrating when history tells us it is really very simple to be financially secure.

Education is important in all we do.  The facts show how it really has been EASY to achieve financial independence. History tells us so.  Still, in spite of education and knowledge, spending and delaying ‘wins”.  Investing loses.

Next week I will address difficult times in the market like the period 2000-2009.  It is those periods that make it easy to be cynical about equities. They contribute to fear and procrastination. They are normal and should be used as opportunities to add to high quality investments.  They should not be used to rationalize delaying investing.

Sincerely,

Thomas J. Curran
 Founder & CEO

Curran Investment Management® is Defining Quality®

The material contained in this article is for educational and informational purposes only.  The information herein is considered to be obtained from reference sources deemed reliable, but no representation or warranty is made as to its accuracy or completeness.  This article is not, and should not be regarded as “investment advice” or construed as a “recommendation” or an offer to buy or sell a security.  The information contained in this article may not apply to your personal circumstances.  Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation.  Information on taxes is based on the tax laws existing at the time of publication.  Tax laws are subject to continual change.  In addition, tax laws vary by state.  This article is not, and should not be regarded as tax or legal advice.  We cannot ensure tax consequences of any transaction.  If you would like a detailed analysis of your tax situation, with specific tax recommendations, you can discuss the possibility of pursuing a formal relationship with Hippo Tax Services, LLC.