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Technology > Marketing Technology

On the Markets, You Gotta' Have Perspective

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As Gilda Radner once said, “It’s always something.” As an independent RIA, I must concur, especially with the choppy markets of the past decade. Since becoming an independent advisor on April 1, 2007, I’ve witnessed the worst bear market since the Great Depression and the near collapse of the global financial system. Using my best Ben Stein monotone interpretation, I have to say, “How exciting.”

During the latter 90s, I was working with a large broker/dealer. Ah, the 90′s–those were the days! Every broker, rep, advisor, whichever moniker you prefer, looked like a genius. Didn’t matter what we did, everybody made money, including the client. The markets were so good, in fact, that a rooster could peck at the stock page and pick a portfolio that would rival, and sometime even surpass, that of the most seasoned broker. As long as you had loaded up on large-cap stocks, and specifically, tech-laden funds, things were good. That is, until the bottom dropped out. Let’s take a closer look.

The Dow inherited a starting level of 2,753 from the close of 1989 and finished the decade at 11,497. What an impressive run! On April 17, 1991, sixteen months into the 90s, the Dow topped 3,000. It took a while, but it reached 4,000 in February 1995. Dow 5,000 occurred on November 21, 1995. The 6,000 hurdle was reached on October 14, 1996. Seven thousand was topped on February 13, 1997, and 8,000 on my 15th wedding anniversary– July 16, 1997. Nine months later, April 6, 1998 to be precise, it crossed 9,000. After retrenching to the mid 7,000s, Dow 10,000 was breached on March 29, 1999. It took only two months to hit 11,000, which happened on May 3, 1999. By the time the Dow reached its pinnacle of 11,722 on January 14, 2000, euphoria was widespread. However, tech stocks, like tulips some centuries before, were about to wilt.

Why do I go into all this history? Well, for one, I enjoy it, but the other reason is for perspective’s sake. After its peak on January 14, 2000, the Dow didn’t reach that level again until October 3, 2006…..six years, eight months, and 19 days later! Then, it began its upward climb once again. The all-time high was 14,164, which occurred on October 9, 2007. Last Friday, the Dow closed at 10,211.

As of the end of May, the 10-year average return was 1.97% for the Dow and -0.82 for the S&P 500. That’s less than the average money market fund, which registered a staggering 2.15%. The Barclays Capital U.S. Aggregate Bond Index returned 6.52% for the same period.

I am on the cusp of a radical change in the way I manage money. I have discovered a new technology which will absolutely transform our industry. I guess you could say I have my own internal tech bubble brewing.

Stay tuned for further details!


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