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"The narrative of the past 17 years has been the outperformance of US stocks, with the main explanation being US exceptionalism. Our analysis reveals that a statistically insignificant portion of this outperformance stemmed from superior earnings growth, with the lion’s share driven by expanding US valuations and a strengthening dollar — raising concerns about its sustainability. History teaches us that such trends are rarely permanent, with economic regimes and relative valuations prone to reversion." https://www.morningstar.com/markets/how-sustainable-is-us-exceptionalism
not just this. sustained elevated markets are not predictors of societal collapse, but several brutal instances where they did not preclude such. not to be confused with the normal biz cycle 'wall-of-worry' cliche.
I have read similar articles over 10 years. One day it would be true, maybe even this year. The US stock market is by far the best one long term. So, it boils down to timing and trading.
So, when someone writes an article like that, my question is What is your record of forecasting, timing, and trading?
"The US stock market is by far the best one long term."
I believe US stocks will perform well in the long-term and most stock investors should have a healthy allocation to the US. This does not necessarily mean the equity portion of their portfolios should be 100% US equities. For example, wouldn't it have been beneficial for retirees (presumably withdrawing from portfolios) to have foreign stocks in addition to an S&P 500 fund during the "Lost Decade"?
"So, it boils down to timing and trading."
No, it really doesn't. Numerous studies have indicated excessive trading often leads to lower returns. It boils down to creating a sensible investment plan with an asset allocation suitable to an investor's risk tolerance/risk capacity, and then sticking to the plan (making adjustments as needed based on life changes). Some investors may find it helpful to work with a financial advisor to develop this plan.
Numerous studies have indicated excessive trading often leads to lower returns. It boils down to creating a sensible investment plan with an asset allocation suitable to an investor's risk tolerance/risk capacity, and then sticking to the plan (making adjustments as needed based on life changes).
That describes us pretty well. Today is good to see how your asset allocation works out. Market is all RED today.
@FD1000 who asked "What is your record of forecasting, timing, and trading?"
Good question. What is yours other than your say so?
First, I don't write articles, get paid, or try to convince you of anything, while this article, among many in the past, has proven wrong. Second, if you want to see my record for risk-adjusted performance, you can read about it at my site. See it (here). If you want to see my system, read (here). Again, I don't promote it. It is just there if you want to learn something new.
"The US stock market is by far the best one long term."
I believe US stocks will perform well in the long-term and most stock investors should have a healthy allocation to the US. This does not necessarily mean the equity portion of their portfolios should be 100% US equities. For example, wouldn't it have been beneficial for retirees (presumably withdrawing from portfolios) to have foreign stocks in addition to an S&P 500 fund during the "Lost Decade"?
"So, it boils down to timing and trading."
No, it really doesn't. Numerous studies have indicated excessive trading often leads to lower returns. It boils down to creating a sensible investment plan with an asset allocation suitable to an investor's risk tolerance/risk capacity, and then sticking to the plan (making adjustments as needed based on life changes). Some investors may find it helpful to work with a financial advisor to develop this plan.
Can you find where I said 100% in US stocks? Any time you switch funds, it is timing, and, as you noted, most are doing it wrong. If you hold static, your portfolio will suffer for many years. (During 2000-10, for 10 years: SPY lost about 9% and QQQ lost over 40%...During 2010-2024 the SPY+QQQ were great.) The solution is good analysis, knowing funds/ETFs very well, and limited/smart timing. A good example is Charles Lynn Bolin's articles.
A sensible investment plan sounds great; the devil is in the details.
Same with financial advisor, in theory, it's a good idea. In real life, not so much. Problem 1: Catch 22: If your investment knowledge is below average, you will not know if your FA (financial adviser) is good. If your investment knowledge is above average, you will not need one. Problem 2: A FA is jack of all trades and a master of none. Anytime you need a real complicated advice, he/she can't answer it. Anything that relates to taxes, you need to see a CPA, anything that relates to trusts, you must see an attorney. Problem 3: A FA can't promise you any future performance or even risk-adjusted performance. Problem 4: The highest commission vehicles for a FA are annuities or a guarantee of something. These are usually bad for the clients.
You probably heard a typical FA claim that they are fiduciaries. It is correct that fiduciary is better than not, but it doesn't guarantee much. In theory, a FA puts their client interests first. In reality, it doesn't work that well. This is how it should work for a typical person in typical situations. You seek a FA advice, a good FA should collect all your information, analyze it, and come up with exactly what to do in about 2-3 hours. They should charge you maybe $1000-1500. You can implement the plan for years to come, unless you have a major change. This means, you don't need the FA for years to come. In the event you have a major change and need advice, one hour of consultation should be enough; maybe another $300 fee. Remember, any time your FA wants you to stay with them for years and collect his/her fee as a % of your portfolio, it is a bad choice. You should only pay them by the hour. You can find good fee only FA at www.garrettplanningnetwork.com/
If a FA followed the above, they would starve. This is why it would be very difficult to find a great, reliable, honest, low-fee FA that puts their client's interests first.
The best idea is to learn and get better. You spent at least 12 years in school; why can you not spend just 100 hours learning the basics? Most people need to handle and manage their money for decades, why not educate yourself? It's not a brain surgery.
Comments
not just this.
sustained elevated markets are not predictors of societal collapse, but several brutal instances where they did not preclude such.
not to be confused with the normal biz cycle 'wall-of-worry' cliche.
The US stock market is by far the best one long term.
So, it boils down to timing and trading.
So, when someone writes an article like that, my question is
What is your record of forecasting, timing, and trading?
Good question. What is yours other than your say so?
I believe US stocks will perform well in the long-term
and most stock investors should have a healthy allocation to the US.
This does not necessarily mean the equity portion of their portfolios should be 100% US equities.
For example, wouldn't it have been beneficial for retirees (presumably withdrawing from portfolios)
to have foreign stocks in addition to an S&P 500 fund during the "Lost Decade"?
"So, it boils down to timing and trading."
No, it really doesn't.
Numerous studies have indicated excessive trading often leads to lower returns.
It boils down to creating a sensible investment plan with an asset allocation
suitable to an investor's risk tolerance/risk capacity,
and then sticking to the plan (making adjustments as needed based on life changes).
Some investors may find it helpful to work with a financial advisor to develop this plan.
Second, if you want to see my record for risk-adjusted performance, you can read about it at my site. See it (here). If you want to see my system, read (here).
Again, I don't promote it. It is just there if you want to learn something new.
Any time you switch funds, it is timing, and, as you noted, most are doing it wrong. If you hold static, your portfolio will suffer for many years. (During 2000-10, for 10 years: SPY lost about 9% and QQQ lost over 40%...During 2010-2024 the SPY+QQQ were great.)
The solution is good analysis, knowing funds/ETFs very well, and limited/smart timing. A good example is Charles Lynn Bolin's articles.
A sensible investment plan sounds great; the devil is in the details.
Same with financial advisor, in theory, it's a good idea. In real life, not so much.
Problem 1: Catch 22: If your investment knowledge is below average, you will not know if your FA (financial adviser) is good. If your investment knowledge is above average, you will not need one.
Problem 2: A FA is jack of all trades and a master of none. Anytime you need a real complicated advice, he/she can't answer it. Anything that relates to taxes, you need to see a CPA, anything that relates to trusts, you must see an attorney.
Problem 3: A FA can't promise you any future performance or even risk-adjusted performance.
Problem 4: The highest commission vehicles for a FA are annuities or a guarantee of something. These are usually bad for the clients.
You probably heard a typical FA claim that they are fiduciaries. It is correct that fiduciary is better than not, but it doesn't guarantee much.
In theory, a FA puts their client interests first. In reality, it doesn't work that well.
This is how it should work for a typical person in typical situations. You seek a FA advice, a good FA should collect all your information, analyze it, and come up with exactly what to do in about 2-3 hours. They should charge you maybe $1000-1500. You can implement the plan for years to come, unless you have a major change. This means, you don't need the FA for years to come. In the event you have a major change and need advice, one hour of consultation should be enough; maybe another $300 fee.
Remember, any time your FA wants you to stay with them for years and collect his/her fee as a % of your portfolio, it is a bad choice. You should only pay them by the hour. You can find good fee only FA at www.garrettplanningnetwork.com/
If a FA followed the above, they would starve. This is why it would be very difficult to find a great, reliable, honest, low-fee FA that puts their client's interests first.
The best idea is to learn and get better. You spent at least 12 years in school; why can you not spend just 100 hours learning the basics?
Most people need to handle and manage their money for decades, why not educate yourself? It's not a brain surgery.