Does anyone remember Reebok’s Easy Tone shoes? Those were the shoes that were supposed to make you toned just by walking. What about that Splenda used to market itself as the same as sugar? Well, they both made these outlandish claims that were debunked, and were both fined millions of dollars. Obviously a shoe can’t be a substitute for the gym, and sugar is not the same as a sugar substitute. Both of these claims are what many would call “too good to be true”. Too good to be true claims are made all the time in advertising. They pull at our emotions. Car dealerships, insurance, and cable companies are great examples. They advertise a great offer, but looking closer you can see it’s only for a short time.
Ask yourself, Does it Pass the Sniff Test. Trust your gut if it smells fishy.
Of course we all want to have, and be a part of the best things in life, but there is nothing wrong with average. In fact over the last 20 years, the S&P 500 has returned an average of 7%. That’s a 287% return on a $10,000 investment over that time period. Not anything to sneeze at, especially considering most retirement funds will have more than $10,000 in them. Still everyone wants to chase the next best thing. Emotions take over. We’ve seen this throughout history as a feast or famine investing all the way back to Tulipmania in the 1600’s. Farmers devoted their entire cropland to planting tulips until the bottom fell out in 1637 causing people to lose their fortunes, land, and livelihood. That was a long time ago, but there is an eerie comparison to today’s lust after bitcoin. Bitcoin is a crypto currency that is not regulated by any government and is completely anonymous. In less than three months between March and June its value surged about 215%. Many are concerned about its instability as it continues to show major volatility.
Chasing the next big thing can be fun, but it usually comes with a lot of risk. In investing, it’s ok to be average. You’re still going to be a part of the exciting stuff, just with less risk of losing your hard earned retirement. Make sure you talk with your financial advisor to have the right amount of risk to get where you want to be in your retirement. If you really want to be a part of the “next big things”, maybe have a separate account so your main investments aren’t affected by the volatility that comes along with the hype. There will always be risks with investing. Don’t risk your cabin or cabana. Run it by an advisor, don’t let your emotions run the show, and run everything through a sniff test!
This week we talked about everything from bitcoin bubbles, to social security and market stats. If you missed this or any other Let’s Talk Future shows, you can follow the link to hear them.
Ep. 77 Sniffing Out the Good Deals
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“Successful people do what they have to do, whether they feel like it or not.” – Brian Tracy
· Yes it’s true the market is at record highs, but it’s not the first time. To get a little history lesson, and perhaps some insight into the
market, check out this week’s Let’s Talk Future show. – (2:44)
· Caller asks about timing the market. Discussion on Emotional Investing. (6:45)
· We had a discussion on Bitcoin on the show the other week. You may even find some interesting facts to share at the water cooler. One thing is for
sure, Bitcoin is still heating up. (15:00)
· Did you have an annuity, or shopping for one now? Did it come with a bonus or guarantee of no loss of capital? Before you do anything you should
hear this answer to a caller’s annuity question. (20:30)
· Averages, and not getting caught up in your emotions when investing (25:17)
The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Investments mentioned may not be suitable for all investors. Any opinions are those of Michael Clark and not necessarily those of Raymond James. Raymond James does not offer, sell or buy Bitcoin or Bitcoin related securities. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S, stock market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Past performance does not guarantee future results. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about our individual situation. The prominent underlying risk of using bitcoin as a medium of exchange is that is not authorized or regulated by any central bank. Bitcoin issuers are not registered with the SEC, and the bitcoin marketplace is currently unregulated. Bitcoin and other cryptocurrencies are a very speculative investment and involves a high degree of risk. Investors must have the financial ability, sophistication/experience and willingness to bear the risk of an investment, and a potential total loss of their investment. Securities that have been classified as Bitcoin-related cannot be purchased or deposited in Raymond James client accounts.