400-Yard Dash in 53.3 seconds!
I debated whether or not I should divulge a little known fact at this stage in my life, but yes, I ran the quarter mile dash in 53.3 seconds in high school. Fifty years later, there are thousands of humans running the same distance in less than 44 seconds; so, who cares about my athletic history?
The point is that my ability to run holes in the wind at one point in my past is in NO WAY a guarantee of future performance. It takes me nearly the same length of time to get down the stairs to my garage as it did to run 1320 feet in my youth. You may wonder, “why is that?” Maybe not.
Let’s talk about all the impressive ads we see on our TV screens spouting impressive returns from mutual funds for the last five, ten and twenty years. The longer span on performance history is generally a more conventional attempt to reassure us of future financial security. Immediately, the mind projects out to the next long haul and accepts the potential gain as a fact of life. Meanwhile, I could not find any recently advertised performance figures on mutual funds for the two or three years preceding 2004 . If they existed, you needed a hound dog to find them. Marketing strategies use numbers to the promoter’s advantage.
But, if you ask the thousands of people who put their money into the hottest index funds in January of 2001 how they feel about past performance [the Standard & Poors 500 index tanked nearly 30% for a continuous period of 24 months.], many of them will tell you they wish they had been giveen more information. Two and a half years is a long time, considering the time value of money.
The start for year 2008, market-wise, is shaky. The reason for the volatility is most unsettling, which is why I will reiterate my previous warnings about so-called conventional wisdom. While I was channel surfing this past week-end, I caught a prominent female financial guru in the middle of one of the most over-used and inappropriate advisory statements of our times. She used the term - long haul - a little too often while implying that the market will go back up. That kind of advice is very bad news, especially for workers who wish to retire inside the next three to five years.
To be brief, we have a dilemma in the credit markets that is bulging. There has never been a larger glut in the sub-prime lending sector than what we have today. The billions of dollars in bad loans around the world weigh heavily on several major economies, especially ours. Refinancing of low-quality mortgages began more than a decade ago and has escalated at a run-away pace to the extent that equity markets are reacting to the situation. If credit quality does not improve, what kind of performance should we expect from the stock market?
Here's something to ponder: define long haul.
If you want an investment strategy that will help to secure your retirement in the next three to five years, it is time to get more involved with your finances. Start by monitoring your investments more frequently to check their performance. If you have been lulled into believing what goes down must go up, snap out of it! Look for sensible advice. It's not the hardest job you ever had.
Hawk
I debated whether or not I should divulge a little known fact at this stage in my life, but yes, I ran the quarter mile dash in 53.3 seconds in high school. Fifty years later, there are thousands of humans running the same distance in less than 44 seconds; so, who cares about my athletic history?
The point is that my ability to run holes in the wind at one point in my past is in NO WAY a guarantee of future performance. It takes me nearly the same length of time to get down the stairs to my garage as it did to run 1320 feet in my youth. You may wonder, “why is that?” Maybe not.
Let’s talk about all the impressive ads we see on our TV screens spouting impressive returns from mutual funds for the last five, ten and twenty years. The longer span on performance history is generally a more conventional attempt to reassure us of future financial security. Immediately, the mind projects out to the next long haul and accepts the potential gain as a fact of life. Meanwhile, I could not find any recently advertised performance figures on mutual funds for the two or three years preceding 2004 . If they existed, you needed a hound dog to find them. Marketing strategies use numbers to the promoter’s advantage.
But, if you ask the thousands of people who put their money into the hottest index funds in January of 2001 how they feel about past performance [the Standard & Poors 500 index tanked nearly 30% for a continuous period of 24 months.], many of them will tell you they wish they had been giveen more information. Two and a half years is a long time, considering the time value of money.
The start for year 2008, market-wise, is shaky. The reason for the volatility is most unsettling, which is why I will reiterate my previous warnings about so-called conventional wisdom. While I was channel surfing this past week-end, I caught a prominent female financial guru in the middle of one of the most over-used and inappropriate advisory statements of our times. She used the term - long haul - a little too often while implying that the market will go back up. That kind of advice is very bad news, especially for workers who wish to retire inside the next three to five years.
To be brief, we have a dilemma in the credit markets that is bulging. There has never been a larger glut in the sub-prime lending sector than what we have today. The billions of dollars in bad loans around the world weigh heavily on several major economies, especially ours. Refinancing of low-quality mortgages began more than a decade ago and has escalated at a run-away pace to the extent that equity markets are reacting to the situation. If credit quality does not improve, what kind of performance should we expect from the stock market?
Here's something to ponder: define long haul.
If you want an investment strategy that will help to secure your retirement in the next three to five years, it is time to get more involved with your finances. Start by monitoring your investments more frequently to check their performance. If you have been lulled into believing what goes down must go up, snap out of it! Look for sensible advice. It's not the hardest job you ever had.
Hawk
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