It was November 2, 2010 and I had just landed at the Boston Airport. While walking to baggage claim, I noticed a large banner hanging on the wall advertising gold investments. I thought to myself, we have got to be close to an all-time high. Talk about gold was everywhere. In hindsight, the record high price for gold turned out to be August 22, 2011 at $1,917.90 in early intraday trading.
The media’s job is to capture the emotional pulse of the public and to plug into their deepest fears. This is what sells newspapers, but is not what fuels the markets. We continue to go through predictable cycles of market ups and downs as well as economic recessions and expansions. People continue to buy lottery tickets in the hopes of becoming rich and hoard cash for fear of losing it at the banks. There is both fear and greed working in the markets, which I believe is a good thing.
TIME, for example, has a history of capturing the epitome of market booms and busts. Take the November 26, 2012 issue article entitled “Why Stocks are Dead (And Bonds Are Deader).” We now know that the S&P 500 returned 32.21% in 2013. “High Anxiety” graced the cover in November 15, 1990 at the start of one of the greatest decades of growth in the markets. In looking back over the years of TIME, one can quickly surmise that the problems we have in the economy are not really new. Can you believe that in March 5th, 1984 the deficit made the cover of TIME? We are dealing with the same issues today. A different time, but the same story.
In times like these clients are often questioning their investment strategy with questions like: Should I be invested in stocks? We think the answer to that question is yes, if you want to obtain a return greater than inflation. The best antidote in investing is to have a disciplined strategy to follow in spite of the headlines in the media. Regardless of the problems facing the markets the human spirit of ingenuity and invention will time and time again provide new solutions. These new solutions will be turned into profitable companies and continue the momentum forward into the future.