Imagine jumping into a time machine to visit one of the largest cities in the world, New York City. You hail a cab and while en route you realize about 90% of the taxi cabs on the streets are electric. What year do you think it is? How far into the future?
You jump back into the time machine and when you reach your next destination the big news is there has been sweeping change in the securities industry. Everyday investors now have access to professionally managed accounts similar to large institutional investors. What year are you in now?
Would you be surprised to learn that in both instances the time machine actually traveled back in history?
Believe it or not, over one hundred years ago, electric cars outsold their steam- and gas-powered brethren. A devastating 1907 fire in New York’s Central Station destroyed over 200 electric-powered cabs which were then replaced by Henry Ford’s significantly more affordable mass-produced gas-powered cars.
The second stop was in the 1940s when the Securities & Exchange Commission (SEC) extensively regulated investments such as mutual funds to allow better access for smaller investors to participate like the big boys and invest in a broadly diversified portfolio.
Fast forward to present day and the electric car continues to gain traction and market share.
On the investment front, exchange traded funds (ETFs) are the shiny new objects. While ETFs may seem novel and innovative, they are fundamentally similar to mutual funds for long term investors, just with a different coat of paint.
ETFs are a popular instrument with robo advisors, computerized online investment management that operate in the increasingly do-it-yourself (DIY) technology world where you can buy car insurance in 15 minutes or establish your articles of incorporation with a few mouse clicks.
Easy, yes. Fast, sure. The best way to invest? Maybe not. Just because you can do it yourself does not mean you should.
A financial professional who understands your investment goals can steer you away from the latest Pet Rock investment sensation and into opportunities with the right balance of security, volatility, and return potential.
Every day we see people pouring their money into investment vehicles they do not understand because they need to be part of the hip new trend or are afraid of missing out.
Cryptocurrency is the latest Cabbage-Patch-Doll holding everyone must have, with Bitcoin currently generating the most buzz. People are sold on the hype without understanding the what, why, or how this investment works. Many simply bank on the “greater fool” theory: “A bigger fool than me will buy in at a higher price.” In a real sense, it is a high-stakes game of chicken; because no one actually thinks they are the greater fool.
Before you get distracted by the next Tickle-Me-Elmo investment venture, do some self-reflection. Take a step back, take a deep breath and ask yourself, why am I doing this? How does this fit in with my long-term investment goals? What would my financial professional recommend?
Because the advice you get from a financial advisor is a dispassionate way for you to stay grounded and stay on course. We help investors see through the frenzy and focus on goal-oriented, long-term strategies where success can be measured, and strategies adapted along the way to achieve these goals. Consider that even Michael Jordan and Tiger Woods, in their prime, still had coaches and trainers.
Some investors have a definitive investment goal, but maybe not a financially sound one. Measuring your investment success on how you fare versus the S&P 500 may sound like valid objective, except when the market drops 50% and your portfolio loses 40%. Congratulations, you beat the S&P; but you decimated your net worth in the process. This probably wasn’t your true goal.
We offer clients advice and guidance that is dynamic, and that sometimes involves sitting you down for the tough conversations. We have been in the industry long enough to have successfully endured multiple bear and bull markets. We know that when markets are booming people start acting irrationally, seeing only gains, becoming overly confident, and ignoring risk. Similarly, when markets hit bottom people start acting irrationally, exacerbating their losses by acting emotionally and not sensibly.
MACRO Consulting Group is the voice of reason.
We peel back the wrapper, chip away at that new coat of paint to reveal tried and true investment opportunities that you can wrap your head around. Understanding what you have in your portfolio and why it is a good fit is much more important to achieving your goals than having the biggest, shiniest new object.