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Let's Get This Crash Over With Already: Financial Advisors' Daily Digest

Using a smartphone to calculate data

By SA Gil Weinreich :

In what I found to be a refreshing article on Seeking Alpha called " Your Retirement Can't Wait For the Next Crash ," The Dividend Guy gets right to the point, noting the "many articles explaining how the market is way too high right now and the next crash will be happening…soon."

He couldn't be more correct. The "crash is imminent" is a whole genre unto itself; it has been such probably for as long as there was an investment press, though it seems to this observer that it has loomed larger in the past decade, similar to weather reports. In my mind's eye, the weather forecasters of my youth used to offer an undramatic forecast until somewhere along the line their eyes started bugging out as they reported hellish heatwaves, torrential downpours and blizzards of the century each new year.

But The Dividend Guy presents a chart showing the market crash of 2008 and the stupendous recovery since then before writing:

Do you see it? I mean, the long term impact of the worst crash in the stock market history? Because I don't. Even the investor with the worst luck would have recuperated his money within three years if he had invested the day before everything went south. Then, the rest is history.

While I don't think we can always bank on winning streaks as long and powerful as the one that began in 2009 and continues unto this day, it is fair to expect some long-term positive return on your risk -- even if recent economic underperformance reduces somewhat the U.S. long-term average stock market return of inflation plus 7%.

For most investors, taking a philosophical approach, as described, will serve the cause of investment returns since the fear-based alternative has by and large been a big money loser. As The Dividend Guy put it:

Do you see all the growth you have missed if you waited for the next crash to hit?

That said, those nearing the start of their retirement must take a practical rather than philosophical approach since it is likely their portfolios cannot withstand a crash coming at precisely the time that they are withdrawing their retirement income and will not be replenishing that income through work. New retirees (and close pre-retirees) must therefore put the emphasis on preservation of capital.

As always, we welcome your thoughts in our comments section. For now, here are other financial advisor-related links:

See also Understanding Medical Facilities Corporation, An Excellent Long-Term Investment For Dividend Lovers on seekingalpha.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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