Fortunes are going to be made - Orman

johnN

/'Fortunes are going to be made' -- Suze Orman on investing amid the coronavirus pandemic
BY SHAWN LANGLOIS | MARKETWATCH - 05/09/2020


https://www.google.com/amp/s/www.marketwatch.com/amp/story/guid/3532E59E-8D6D-11EA-AD06-F36B40BB8290


'I can guarantee you that if you stay in and you just stick with it, three years from now you will be very, very happy that you did'

Celebrity financial adviser Suze Orman isn't for everybody. She once told MarketWatch

http://www.marketwatch.com/ story/suze-ormans-fire-storm-her-advice-for-millennials-retiring-early-is-simple-but-bleak-2019-06-24



that "there are people that hate my guts. You don't even want to know the things they say."

But there's no denying that her common sense brand of money management has resonated with her devoted fanbase over the years. Lately, with many in that fanbase struggling to navigate the coronavirus pandemic, she's been hitting the media circuit to address just some of the issues.

During a CNN segment that aired on Saturday, Orman was asked by a viewer how to approach investing in the stock market in the face of the historic volatility.

Here's her answer:

In other words, she's advising those without more-pressing obligations to take a specific sum of money and invest it every month into something like the Vanguard Total Market ETF(VTI) .

"If you do it month in and month out and you have at least three five or 10 years or longer until you need the money you will be happy," she continued. "If you need money within a year it's not money that belongs in the stock market. Take it out now."

Back in late February, when the Dow Jones Industrial Averagehad dropped more than 1,000 in a single session on fears of what the coronavirus could do to the U.S. economy, Orman raised a few eyebrows when she said "I rejoice" in the face of such pullbacks.

She used the opportunity to again push her case for dollar-cost averaging (http://www.marketwatch.com/story/suze- orman-says-investors-should-rejoice-at-the-dows-more-than-1000-point-tumble-heres-why-2020-02-24).

"The higher the market goes, the shares cost more, the less shares their money buys, the less money they make, in the long run," she told CNBC. "With this dip, if it continues to go down, they should just stay the course and actually be quite happy because the market is still incredibly high."

One month and a brutal stretch of market losses later, the New York Times best-selling author returned to CNBC (https: //www.cnbc.com/2020/03/26/coronavirus-suze-orman-says-no-better-time-to-start-investing.html) in late March to urge investors to stick with the plan.

"You will never, ever, know the bottom. You will never, ever, know the top," she said. "Fortunes are going to be made out of this time. So just stay calm. I can guarantee you that if you stay in and you just stick with it, three years from now you will be very, very happy that you did."

Here's Orman talking financial stability in a recent appearance on the Tamron Hall Show:

(https://www.youtube.com/embed/0Auos1d8c_8)

Orman, of course, is not alone in pushing the time-tested dollar-cost averaging approach.,/



Do you trust ms Orman?

LewisBraham

Given that there is a buyer and seller on every trade and generally one wins and one loses, to say "fortunes are going to be made" is well duh. Here's a followup question--fortunes are going to be made off whose backs? In every crisis throughout history there have always been profiteers who benefited from others' suffering:


In this case, it could be the American taxpayer who generally owns little to no stocks paying for a bailout of wealthy investors--or ones soon to have their "fortunes made." Or the folks who died having to go back to work to keep the company profit machine going because the president said they should behave like "warriors" and die for their jobs. Or some of the 27 million unemployeed who just lost their job-based health insurance and have to pay immense non-insurance negotiated bills to pharma companies and hospitals while William Barr is now in court trying to kill Obamacare once and for all. Oh, fortunes will be made indeed.

bee

Careful...Suzie only invest in the stock market what she is comfortable losing:

Orman told a New York Times journalist where she has her OWN money invested…. safe, slow-growing, couldn’t lose-it-if-you-tried municipal bonds! In Orman’s words:

“I buy zero-coupon municipal bonds, and all the bonds I buy are triple-A-rated and insured so that even if the city goes under, I get my money. I take a little lower interest rate to make sure my bonds are 100 percent safe and sound.”

When the reporter asked if she played the stock market at all, Suze dropped this bomb:

“I have a million dollars in the stock market, because if I lose a million dollars, I don’t personally care.”

Why doesn’t she care? Because at the time, her assets were estimated at about $25 million, plus another $7 million in real estate. 1 million out of 32 million equals about 3%. So Suze is only willing to subject 3% of her assets to the roller-coaster ride of the stock market which she pushes so freely on her audience, who CAN’T afford to lose it!

But even Orman’s assertion that losing a million dollars is POSSIBLE ought to send chills down the spines of every Suze Orman follower.

Suze recommends putting YOUR money at risk and out of your control, but she practices the opposite, ONLY putting what she can easily afford to lose in the stock market.

Source:
https://partners4prosperity.com/suze-ormans-advice-on-insurance-investing/

rono

Howdy folks,

At this time I see buying an index as the silliest thing you could do. Do you know how many zombies are in the Dow or 500? The government bailouts are going to stop one day and when the music stops the bankruptcies are going to be legion. Can you make a buck playing zombies? Sure, but you better be nimble. And there are those that like the short side but that's fighting the Fed and that's risky.

I'd rather invest my equity allocation in companies that are winning now and will win post virus. Companies that have cashflow and are still paying dividends. You are probably a customer of theirs.

Good luck

Rono

JoJo26

Active managers year in and year out tout that "now is the time" but when will it actually be true?

RisklessInSeattle

Fortunes are going to be made and fortunes are going to be lost too.

The saying is: "I made a fortune trading stocks, but I lost 2 fortunes."

Roy

@bee

That Orman article is quite old, 2014...and part of it references a 2008 interview. But, I get the point, her actions and advice in 2008 are going in opposite directions at that time anyway.

BrianW

To me the decision is very binary, if you believe this will be an extinction event, sell (and enjoy the proceeds during the time we have left). However, if you believe we'll come out on the other side, buy.

BrianW

I do agree with @rono regarding indexing. We have no idea how many companies are in deep compost and won't make it to the other side. Hope my active managers are earning their keep.

rforno

If I was sitting on 25M like her I'd probably have 5-10M in 'safe' bonds earning piddling amounts as my cash 'bucket' for emergencies and/or my retirement piggy bank. Remember, the more you have sitting "earning next to nothing" the more "something" you will earn from that position ... you don't *need* to have 4% payouts from them to get a comfortable return if there's enough mass there to begin with.

The rest would be mostly in equities and perhaps a few direct investments within my area of expertise.

catch22

Hi @rforno

You noted:

" in 'safe' bonds earning piddling amounts"

Is/are the piles of debt too large across most bond areas? Yes. Will a day of reckoning arrive to blow up the debt markets? The potential exists.
Are some bond areas not earning their "keep" now? Yes. But, other quality areas are, well; "providing" for their owners.

While a debt blowup potential exists, I do not find this anymore more worrisome than the forward theoretical value of many equity sectors at this time.

The chart includes SP500 vs a few higher quality bond areas: IEF, TLT, EDV, ZROZ and AGG.
The chart is placed at 1 year (254 days). Right click the 254 days to find other default choices......YTD, etc.

CHART

Be careful and well,
Catch

rforno

catch22 said:

Hi @rforno

You noted:

" in 'safe' bonds earning piddling amounts"

Is/are the piles of debt too large across most bond areas? Yes. Will a day of reckoning arrive to blow up the debt markets? The potential exists.

Catch

Absolutely. Ten, twenty years ago bonds were considered safe. But today and going forward? That's why I put 'safe' in quotes.

little5bee

It seems like fund flows are of equal or greater importance than actual holdings, particularly when it comes to illiquid bonds. Too many funds getting slammed at once for redemptions.

VintageFreak

a financial PLANNER is now a stock market prognosticator. "I guarantee it". With what?

hank

I’ve never been a Suze Orman fan. But different folks learn in different ways. If she works for you fine. I doubt many would enjoy listening to Howard Marks droning on for hours about the appeal of buying distressed securities. But he happens to be my cup-of-tea. Different strokes I guess. Knowledge presents itself to different people in different ways.

Linked below is a pretty good (2019) article discussing 20 of Suzy’s teachings, explaining which the author finds of value and which he disagrees with. Pretty even-handed discussion.

Where I Agree & Disagree With Suze Orman
https://medium.com/makingofamillionaire/where-i-agree-disagree-with-suze-orman-bd7cbcfef3a9

davidrmoran

yeah, she has always given some prudent conservative advice with way wacko and foolishly conservative advice

for years

dogmatic to boot