Stocks

Half Full or Half Empty - Stock Picking Still Loses, Value Still Wins

“Almost Half of Stock Pickers Beat the Market in Early 2022 Selloff” read the WSJ News Exclusive headline on Thursday 9/15/22. The story goes on to explain that this year’s middling performance is the best year for active stock pickers since 2009!

For ATX Portfolio Advisors® clients and Accountable Update readers, that probably is no surprise. In fact, as I pointed out in an April 2019 Accountable Update titled “Mutual Fund Landscape”, there are normally fewer than 25% of actively managed funds that tend to survive and outperform their benchmarks.

2 Tips for Dealing with Market Volatility

Last week at my Rotary Club meeting, our scheduled speaker was a no show. When our President asked if anyone had something they would like to talk about, I offered to present one of my recent Accountable Update articles, 10 Questions for Every Investor.

The article was well suited for an impromptu presentation, with several charts interspersed with practical advice. But when we got to the Q&A, it became apparent that the recent market volatility was weighing on some folks. The question that was seemingly on everyone’s mind was, “When will stocks stop going down?”

My answer, as it is anytime someone asks me what I think the stock market will do tomorrow, is to offer a couple of tips for dealing with market volatility.

What is the "Point"?

Where were you on November 14, 1972? I don’t recall much, as I was only 4 years old, but I do have a memory of it. We had one black & white TV in our home that was always tuned to Walter Cronkite at 5:30 PM on the local CBS affiliate (it was one of only four choices if you counted PBS).

My earliest memories are of watching Apollo rocket launches and splashdowns on that TV. While I don’t remember exactly why I was paying such close attention on this day, I suspect that my mom had mentioned that they may show the astronauts or the rocket pad at Cape Kennedy, as the Apollo 17 mission was scheduled around that time. While this tactic may have kept me out of her hair while she was cooking dinner, it also led to me to asking questions. A LOT of questions.

“What is Vietnam,” I would ask?

“A country,” would be the reply.

“What is a Watergate?”

“A hotel.”

But sometimes, the answer would just be, “Ask your father when he gets home.”

On this day, Mr. Cronkite had led the news with a headline that announced that the Dow Jones Industrial Average had just exceeded 1,000 points for the first time in history.

“Mom, what is the Dow?”

“It is where you can invest in companies,” she said.

“What does it mean to be at 1,000 points?’

“Ask your father.”