Streetwise for Friday, December 11, 2020

This year has been tremendous one for the equity markets. The S&P 500 equity index finished November up 11.8% on the month, its best one-month performance since 1987 and its best November in history.

Despite the pandemic, the S&P 500 finished November up 13.3% year-todate. And this is despite the trials and tribulations facing the nation, with the Coronavirus taking stage center.

However, things have not always been peaches and cream. For example, mid-December of last year saw whining and complaining by those in the investment world, both amateurs and professionals, all of whom should have known better. Back then the market was in a bit of a decline and you would have thought the world was coming to an end.

Tom Hanks’ reprimand from “A League of Their Own” – “There’s no crying in baseball!” should have been transformed to “There’s no crying on Wall Street!”

Today, there is still whining and complaining that the markets are due for a “crash.” The reasons for this vary from current election results to COVID-19. No, the sky is not falling, although one client put it well when he wrote to me stating that if sky is falling, buy sky.

All in all, it brings back a nearly forgotten memory of long ago. I had the audacity early in my career to make known to dear old Dad, who for most of his career owned a brokerage firm, my displeasure at the equity markets not adhering to my expectations.

The rebuke was swift and long lasting. “If volatility in the markets or a particular stock is upsetting to you, it’s time to consider another career.”

Now, do not spill your eggnog but for most Wall Street is an essential ingredient for your financial security. Additionally, there is no “good time,” or “bad time,” to invest. It is the methodology with which you allocate your investment resources and the quality of what you invest in that determines your level of investment success.

Just look at the annual performance of companies such as Procter & Gamble, Microsoft, and Toro, all of which are totally uncorrelated, meaning that they move independently of each other.

With a bit of work, anyone can effectively establish and maintain a well contructed portfolio. And you can do it without the myriad of newsletters, books, charts, and the seemingly endless series of free meal seminars that are so often hawked. To say you cannot; is an excuse, not a reason.

Do I believe in investing in equities? Absolutely. Ask yourself this question, where will the markets be a year or two from now? To answer that question, I would suggest you google the performance of the S&P 500 equity index over the past 20 years.

More importantly, there is another side to investing. As you sit back, eggnog in hand, take a moment to ask yourself this question...have you have ever helped a child, a teenager, or maybe even an adult learn some investment fundamentals? It is never too early or too late to introduce someone to the benefits of investing.

I mention this idea every year because the discipline of investing will, of necessity, play a key role in determining a person’s future wellbeing.

For example, a good place to start with kids would a gift of a few shares of stock, and a great way to keep them interested is to have them help with the stock selection. Find out what products and services they are interested in, and use themselves, and then research to see if they are products of a publicly traded company. Involving young kids with the selection of the investment, and having it be in a product and company they are familiar with, is a great way to raise their level of investment enthusiasm. It is also good investment advice to invest in that with which you are familiar. While he or she might not knock the cover off the ball, remember you want them to learn good investing skills.

Lauren Rudd is a Financial Advisor with Raymond James & Associates, Inc., member New York Stock Exchange/SIPC, located at 1950 Ringling Blvd #401 Sarasota, FL 34236. You can contact him at 941-706-3449. This market commentary is provided for information purposes only. The information provided is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of the author and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results.

The S&P 500 index is comprised of approximately 500 widely held stocks that is generally considered repersentative of the U.S. stock market. It is unmanaged and cannot be invested into directly. Past preformance is no guarantee of future results.