“Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.” —Warren Buffett
Our family's Spring Break trip to Florida in 2000 took place during the infamous dot-com bubble burst. I can vividly remember my dad's reaction to the news of the bursting of the tech bubble. He had some of his portfolio (I'm not sure how much) invested in dot-com stocks via the Nasdaq Composite Index, which declined by 25% that week of our Spring Break. It ultimately took 15 years for the Nasdaq to get back to its high from the year 2000.
As we’re in the midst of the COVID-19 health and financial crisis, you likely have been watching the stock market decline and worrying, “what does this mean for me?”
When advising our clients to stay the course (i.e. stay fully invested), our advice is not based on wishful thinking about the markets. The advice is grounded in historical reality, and in a hope for the future.
These past few weeks have seen extreme stock market volatility, the WHO declaring a pandemic, and the U.S. implementing travel restrictions and many other measures (with more to come, assuredly) to help combat the spread of the COVID-19 coronavirus.
Our thoughts on the current stock market malaise -- and accompanying Coronavirus fears.
I won’t tell you that skipping lattes will make you a millionaire (because I don’t believe that). I’m not going to spend-shame anyone in this post. But I will forever maintain that frugality is a darn-near surefire way of building wealth. If you spend meaningfully less money than you make (that is, saving 15% or more of your income), it necessarily follows that you will build wealth. That’s not an opinion; it’s math. If you can only save 10%, then start there. But ultimately, work up toward a 20% savings rate…and then move higher from there. We have multiple clients saving more than 50% of their after-tax income.
Statements you will hear outside TWG’s walls, but not inside them: “Money is really cheap right now.” “I get a tax deduction on this, so it’s a good deal.” “The dealership is providing interest-free financing on the new model, so I’ll buy new.” “We refinanced and are saving $300/month on our payments.”
My wife Krista told me a great story from her trip to Costco yesterday with our two sons, Ford (age 3 ½ ) and Teddy (age 2). Krista bought yogurt for each of the boys. Our younger son Teddy quickly finished his yogurt and immediately began to cry for more. Ford responded by feeding his own yogurt to Teddy, spoonful by spoonful. He did that without any prompting from Mom.
The bull market lives on. This bull market had near deaths in 2011 and 2018 – each time narrowly escaping the 20% decline threshold that defines a bear market (and thus ends the bull market).
At the end of August, I (Dan) competed and finished runner-up in the Hazeltine National Club Championship. You are probably asking: what does this have to do with being posted on The Wealth Group’s blog about personal finance? Don’t worry; I will get there.
My wife Krista and I have been blessed with three children. In case you have lost count, Austin and his wife Jennifer have been blessed with eight children (and counting?).
