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Clients: This does not apply to you. You have already been through this process.
I love to write articles to fight back the doom and gloom and the financial noise all around you. Things are so much better than many of you realize. I dislike writing articles with a negative tone.
With that being said…. I am upset. The following article may contain a lot of bold, italics, and underlining.
I’m scrolling through my newsfeed this week, and the fourth article that comes up is:
At first glance, this may be a very alarming headline for many of you. Everybody is always a little skittish about their investments and, who knows, maybe this guy is on to something, right?
This article comes from CNBC which some feel is the gold standard in investing coverage. This article could hold a lot of weight for many people. But should it?
It begins by talking about how this investment manager, David Tice, predicted the stock market crash in 2008. That prediction gave him some notoriety in the financial world.
He is what is known as a “bearish” investor. Bulls mean the market is strong, bears mean the markets are weak. So this guy is generally down on the prospects of the market. That’s fine, he is welcome to his terrible opinion.
Let’s talk about his “amazing” powers of prediction. Mr. Tice has been predicting a market crash every year for fifteen years. Was he right one time? Yes. Was he wrong fourteen times? Yes.
Mr. Tice manages a mutual fund that bets the stock market is going to go down. As Mr. Tice is always concerned about a crash, his fund reflects that philosophy. Of course he collects fees off of his fund. Last year he made 1.3 million dollars. But I digress…
As the article continues, it shows off the fact that the fund is up 3% in the past month. That sounds pretty good, but let’s look a little deeper look into his fund. As I said, the fund does well in bad markets and poorly in good markets.
If you invested in his fund (AdvisorShares Ranger Equity Bear ETF) eight years ago, how would you have fared? If you invested $100,000 in 2013 into his fund, it would now be worth $10,000. I am not making that up. The market always goes up over time. Mr. Tice was wrong over and over. How is this guy even being positioned as an expert? It would be hard to lose that much money even if you tried.
This is completely irresponsible of Mr. Tice and of CNBC. These headlines are not harmless. People like you make terrible decisions because of the “advice” from a guy who lost his clients 90% in the last eight years.
“Maybe he’s right,” some people across the country thought to themselves. “I had better sell my portfolio.” In fact, many people don’t even read the article. They just see the headline. If you are bombarded with enough of this stuff it is hard not to get worried.
Mr. Tice explains his poor performance. Sure the fund is down 62% in the past two years. But, “He acknowledges it’s tough to time the next major pullback, and he’s often early.”
So for thirteen years he has been telling his investors, “I may have been a little early on the scary prognostications, but it will happen. I swear.”
How is there an article about this guy? How is this a story? Why should we pay attention to what this guy has to say? Why??
I’ll tell you why. It gets people to click. I’m also pretty sure he pays CNBC to get the article published.
If CNBC interviewed a responsible investment manager he might say, “The markets may or may not go down in the near future. It really doesn’t matter. This stuff always comes back. Stop reading about this stuff and go do something more important.”
So let’s finish on a positive note.