20 June, 2023 Total Client Experience

Paul’s Spring 2023 Comments

What Makes You Think That Is Actually True?

“I heard the market is going to crash.”

“I heard we are going into a recession.”

I’ve heard these types of comments more than a few times from investors who are ready to change their portfolio after hearing a prediction from a media figure or someone they feel knows these things. Many thousands of articles have been written on the dangers of listening to financial “Experts” in the mainstream or social media and their endless predictions of doom and gloom. I found interesting, although not surprising, the findings of a recent paper that tracked data on 29,000 “Finfluencers” on a financial, social media site. The study classified these Finfluencers into three categories.

  • Skilled,
  • Unskilled,
  • Anti-skilled

28% were considered skilled, providing useful advice, and adding monthly alpha of +2.6%. 16% were deemed unskilled, whose advice did not affect investor returns, while the majority, 56%, were anti-skilled. Following their advice yielded a negative monthly alpha of -2.3%. One might think that most would gravitate to the skilled group, but the opposite occurs as investors routinely flock to the loudest, most confident sounding yet least capable voices. This mirrors Jim Collins’s research in his book “Good to Great,” where he found that the loudest and most confident business leaders were less successful than more modest and less audacious.

Financial “expert” Jim Crammer uses sirens and bells in his “Mad Money” program on CNBC while, according to The Spectator, following his recommendations between 2017 and 2021 would have resulted in underperforming the S&P 500 by about 6%.

An excellent way to determine whether there is any value to a prediction or fact is to ask the person who made the comment, “what makes you think that is true? Once you receive an answer, ask the same question about their response, “what makes you feel that is true? Go through this process five times in total, and it would generally tell you if the prediction or fact has any real substance or is hot air.

Investors flock to loudest, least skilled voices on social media, finds research | Investment Executive

10 Surefire Ways to Ruin Your Financial Future

For those that missed our March 8 webinar “10 Key Principles of Investing for Uncertain Times” featuring Phycologist and Behavioural Finance Expert Dr. Daniel Crosby. It is available to watch using the link below.

10 Key Principles of Investing for Uncertain Times

Dr. Crosby followed up his webinar with an IPC exclusive report, 10 Surefire Ways to Ruin Your Financial Future, available to view and download today.

Spring Market Rebound

Market rebounds occur unexpectedly and unpredictably, and this year has been no different.

After last year’s poor market performance that included the first-ever double-digit bond market losses, much of the media was confidently predicting more bad things ahead.

Instead, equity and bonds markets have enjoyed a healthy spring rebound. Rational and patient investors who did not panic and “stayed the course” during 2022 have been rewarded accordingly in 2023.

Many of you ask us “what’s next”? and as always, we spend our time and efforts on important things for our clients and what we can control rather than wholly unpredictable and uncontrollable things such as markets. In other words, we are not sure.

Interest Rates & Inflation

These are the last eleven annualized inflation readings in the US since the inflation rate peaked last summer:

  • June 9.06%
  • July 8.52%
  • Aug 8.26%
  • Sept 8.20%
  • Oct 7.75%
  • Nov 7.11%
  • Dec 6.45%
  • Jan 6.41%
  • Feb 6.04%
  • March 4.98%
  • April 4.9%

Lower inflation should allow central bankers to ease up on interest rate increases and offer the potential for decreased rates at some point in the future. This is generally considered good news for stock and bond markets.

From <https://awealthofcommonsense.com/2023/04/short-term-long-term-inflation-trends/>

Catching Our Weekly Podcasts?

“Retirement Straight Talk with Paul and William”

If not, you’ve missed us talk about:

  • Five estate planning mistakes you don’t want to make.
  • The pros and cons of early retirement.
  • How much is enough to retire?

And many more. Listen to us wherever you get your podcasts, or watch us on our YouTube channel (don’t forget to rate us, subscribe, and pass it on to others who may enjoy).

The World Is Getting Worse “Fallacy”

Bad news sells much better than good news, so it’s no surprise that we hear far more about what’s bad vs. good. The facts tell us a very different narrative, where the world we live in is a much better place by virtually all metrics than just a generation ago. Here is one more example.

The rate of malnutrition globally has decreased from 65% in 1950 to less than 9% by 2019.