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Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

  • Writer's pictureClay Reynolds

Investing: Simple Not Easy

Warren Buffet, chairman and CEO of Berkshire Hathaway, has referred to investing as “simple but not easy.”  What makes it so simple is that the best strategy is making regular contributions to your investment accounts. However, the difficulty comes with following through with that strategy. This is due to outside noise in the investment world and watching the volatility of the market day to day. This market volatility is precisely why it is essential to diversify your investments and make regular contributions.

 

The Reasons

The first reason for this difficulty is you do not know what the winning sectors/stocks will be this year or in the coming years. An example would be investing in Global Real Estate stocks (GRE). In 2004, 2005, and 2006, the annual return for investing in GRE stocks was 36.56%, 14.84%, and 40.26%. It was leading all asset classes for returns. However, the following year, after that return of 40.26%, Global Real Estate had an annual return of -7.27% in 2007. When we see it rising, it is a human tendency to want to ‘hop on’ a sector or stock. Having a well-diversified portfolio gets you exposure across many different sectors to reap the benefit of the rising & thriving sectors while limiting the risk with your investments. I say limiting risk because of the fact that if a certain sector of stocks is having a rough year, you are invested in other sectors that may be having a great year. Just as Ecclesiastes 11:2 says, “Divide your portion among seven, or even eight, for you do not know what disaster may come upon your land.” This is why Dave Ramsey recommends investing in the “4 categories” of funds and why that is what you will hear when you meet with an Advisor on our team.

 

The second reason for this difficulty is the market's volatility, which causes many investors to steer away from their investment plans. As I mentioned, consistently contributing to your investments is the most important and effective thing you can do. It sounds almost too simple. What makes it not ‘easy’ is how the stock market gets us our rates of return.


This chart is an excellent illustration of the nonlinear path of total returns. The red dot illustrates the lowest the S&P 500 index dropped during that current year, and the blue bar shows the total return for that year. If you look right before the year 2000, you can see that despite the stock market dropping  -19% at a point throughout that year, the total return on the year was still a positive 29%. The year 2020 was a challenging year for a lot of people. In 2020, the stock market had a dip of 34%, but by the year's end, the total return was still a positive 18%. Emotional investors often miss out on potential gains as they want to get out of the market when they start seeing red.

 

The Positives and Negatives – and all the emotions in between

The stock market is positive 80% of the years and negative 20% of the years. If you look at the market even closer, each day it is positive about 53% of the time and negative 47%. Talk about an emotional rollercoaster. The variation of peaks and troughs is challenging to see through sometimes. However, stepping back and seeing an aerial view of the data helps give some understanding of the market's erratic behavior and why we must diversify and consistently invest.

 

In conclusion, spreading out your investments to encapsulate many different sectors allows you to minimize the risk that comes with a down market while also benefiting from the gains in multiple sectors. Whitaker-Myers Wealth Managers ensures that our clients are well diversified in smart funds that are run by a strategic process. If you want to schedule a meeting with an advisor to learn more about Whitaker-Myers and how we approach investing, click here. We take pride in having the heart of a teacher and would love to answer any questions you may have.

Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

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