Written by: Tim Butt
Co-founder and CEO of The Self Empowered Investor
From the entire team at The Self Empowered Investor, we wish every investor a healthy, joyous, and most prosperous New Year!
As I reflect on 2013 from an investment perspective and look ahead to the 2014, there is much to be thankful for; but there is also much that concerns me. As we closed out 2013, many “red flags” became apparent relative to our market’s euphoria. Subsequently, I’ve committed myself and our team to a top priority worthy of the current market environments. Our number one priority will be the education of how and why investors of all generations and levels of wealth MUST integrate a strategy to protect and preserve their accumulated capital. No longer can any investor afford the losses associated with bubbles bursting.
Consider the following facts (as of December 31, 2013):
Tech Bubble (1995 – 10/2002)
- S&P 500 High: 1,552 on March 24th, 2000
- S&P 500 Low: 763 on October 10th, 2002
- S&P 500 Result: 50.8% Loss
- Bull Market Duration: 5 years
- Bear Market Duration: 2.5 years
Housing Bubble (10/2002 – 3/2009)
- S&P 500 High: 1,565 on October 9th, 2007
- S&P 500 Low: 676 on March 9th, 2009
- S&P 500 Result: 56.8% Loss
- Bull Market Duration: 5 years
- Bear Market Duration: 1.5 years
Current Bubble (3/2009 – ?)
- S&P 500 New High: 1,848 on December 31th, 2013
- S&P 500 Low: ?, Date TBD
- S&P 500 Result: ?%, TBD
- Bull Market Duration: 4.75 years (as of 12/31/2013)
- Bear Market Duration: TBD
A couple lessons learned from previous bubbles:
- All indices, including the DJIA, S&P 500, NASDAQ and International, have suffered similar massive losses of wealth when bubbles burst
- A Buy-and-Hold strategy (being invested 100% of the time) with proper asset allocation and global diversification DID NOT protect a portfolio’s wealth from massive losses
- Bull market has generally lasted 5 years
- Bear market has generally lasted 2 years
- No one can predict the highs/lows or dates of any current or future bubbles
As we enter 2014 with most indices at all time highs and the current bull market entering its 5th year, The Self Empowered Investor will begin a targeted campaign to educate investors in employer-sponsored plans (401k, 403b, Roth/401k, etc.) and self-directed plans (at brokerages such as Scottrade, TDAmeritrade, Fidelity, etc.) on how they can easily integrate a strategy to preserve and protect their wealth from future major market meltdowns.
If you as an investor feel compelled to protect your wealth starting in 2014 and want to learn how to easily integrate a strategy to do such, we invite you to connect with The Self Empowered Investor and sign up for our New Year’s Resolution/Wish education webinar (coming soon).
Again, The Self Empowered Investor extends best wishes for 2014 and may all your investments continue to prosper for years to come!