The One Question That Can Make Your Retirement Richer


To immediately watch the Market Situation Report, click here.

                                  The One Question That Can Make Your Retirement Richer

Each day, week, month and year, there is a question that I repeatedly ask myself.  When I realize the answer to that question, it helps me with investing, my relationships, my marriage, parenthood, and it helps me to help you get what you want.

This is a question that I have never heard anyone else ask.  Since this question has made such a big difference in my life in how I manage money, I want to share it with you.

One thought has been bouncing around in my mind for years, but has really been brought to the forefront this week.  That thought is: There are no points awarded for difficulty in investing.

Humans love and strive for complexity.  They believe that the more complex the strategy is, the more strong and powerful it is.  However, when it comes to investing, it is the exact opposite.

Although deceased, there is one person who is responsible for what we have for modern day investing.  That person is Benjamin Graham.  He was interviewed in 1976, and there was one question asked during that interview that jumped out at me.

That question was:  “In selecting the common stock portfolio, do you advise careful study of and selectivity among different issues?”  

Benjamin Graham responded with, “No.  I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities.  This was a rewarding activity, 40 years ago, when our textbook, ‘Graham and Dodd’ was first published; but the situation has changed a great deal since then; in the light of the enormous amount of research now being carried on, I doubt whether in most cases such extensive efforts will generate sufficiently superior selections to justify their cost.”

Benjamin was a mentor of Warren Buffet, who is one of the best investors on this planet.  Towards the end of his life, Benjamin Graham indicated that the complex approach is no longer needed and no longer works.

However, we all want to make things more complex.  Humans have a deep desire to increase complexity…just look at middle management in corporate America.

Furthermore, I am constantly questioned by members about adding more positions to the Fearless Wealth portfolio and adding more steps to my strategies.

I am no different, as I am also human.  I want to add complexity to life/investing too. The only difference…I know it makes things worse.

So the one question I constantly ask myself each day, week and month is, “How am I creating complexity in my (fill in the blank)?”

There are three uncomplicated charts that I want to share with you this week.

The first chart below is the S&P 500, which shows stocks for publicly traded companies.  I am using the S&P 500 because it is the most followed stock index in the world, and probably has the most influence over any other stock index.  By looking at the image, ask yourself, “Which direction is this going?”  Is it going up, down or sideways?

 

072713Image1.jpg


To my brain, the price chart is going up.  Notice the horizontal line towards the top of the chart above.  That line indicates the old lifetime high of the S&P 500.  So, this is not complicated. As long as the S&P500 stays above the old life time high, as seen by the line on the chart, the S&P500 has more upward movement.

Take a look at the US 10-Year Treasury Bond chart below. We have discussed in the past that if the 10-Year Treasury yield stays above 2.4%, which is where the horizontal line is on the chart, that means that the super low rates of the past are behind us.

In hindsight, the 10-year US Bond clearly hit the bottom in July 2012, as depicted in the chart below.  It was about 1.4% in mid-2012.  Today, we are at about 2.6%.  Since May 1st of this year, the 10-year yield is up about 60%.  That is an incredible increase in such a short amount of time.

Again, with an uncomplicated approach, if the yield stays above 2.4%, then the super low rates of the past are finished.   

072713Image2.jpg


The last image below shows a price chart of the U.S. Dollar going back to 2004.  I wanted to use the U.S. Dollar as a currency example because it is the most used and followed currency on this planet. 

Overall, you can see in the chart that the U.S. Dollar is stable.  Although people rushed into the Dollar in 2008 when the ‘world was ending’, they rushed back out and into it again and again.  However, for the most part, it is stable.

When there are rumblings that the Dollar is going to be worthless, or that it is going to spike up and become more valuable, just look at the uncomplicated view on the price chart and you have your answer.  It indicates that the U.S. Dollar is stable.

072713Image3.jpg


What I would really like you to take away from this week’s Market Situation Report is the question, “Where are you complicating your investing?” Because you are complicating your investing…and that is hurting your future.

072713Image4.jpg

Even as a student of investing for 20 years, I still ask myself this question each day.  The more I eliminate complications from my life, the more time, energy, and wealth I have to share.

So, write that question down and answer it each day.

Together, we are growing and protecting your wealth,

RCPeck-Dig Signature.JPG

 

0 Comments