Broker Check

A Financial Tragedy—But Not For Our Clients

May 24, 2021

Americans missed the boat these past twelve years. After the horrific 2008-09 stock market meltdown, terrified Americans took trillions of dollars out of stocks and moved it into bonds and cash. In fact, they sold more stocks than they bought since 2009. Large institutions and money managers invested in the market, but not individual Americans.

However, the great news is that the clients of Atchley Financial Group have always invested in equities.

On April 9, 2021, Bank of America reported that more money had gone into stock funds in the past five months than in the previous twelve years. So, Americans finally got back into stocks, but the life-changing damage to their financial plans had been done by then. Many of these Americans will never enjoy retirements filled with dignity, serenity, and independence. The financial press is certainly to blame for fanning the fires of fear. It is their job to sell their media and they know that bad news sells.

This is a breathtakingly depressing bit of news for those terrified Americans who missed out on one of the greatest bull markets in history. On March 9, 2009—twelve years ago—the Dow Jones closed at 6,547. On Wednesday, May 12, 2021 it closed at 33,587. Stocks have risen more than 400% since March 2009. Absorb that terrific result for a minute.

We at Atchley Financial Group see ourselves as your antidote to fear. It’s often an uphill fight, but we are pleased to see our clients’ continuously great behavior when it comes to sticking to their investment plans.

Our clients know we believe that owning the great companies of the world (aka stocks or equities) provides one of the finest ways to build wealth without working. Think of it this way: Owning equities allows us to build wealth over time by tapping into human ingenuity. The people who run the corporations whose stocks we own are talented at seizing opportunities. When they succeed by growing their profits, we all prosper as their stocks tend to rise in value over time.

The reason so many Americans shy away from stocks is that they are unpredictable in the short run. According to Nick Murray Interactive (May 2021), since 1926 stocks have shown positive returns 75% of all calendar years, 88% of all rolling 5-year periods, 94% of all rolling 10-year periods, and 100% of all rolling 20-year periods. Do you agree with us that stocks seem like a great “bet” for the long run?

But those losses of 20% or more (bear markets) that strike without warning about one year in five on average terrify Americans into heading for the exits.

We consider ourselves behavioral financial advisors. Our job is to invest our clients’ long-term wealth mostly in equities and then coach them to stay put when the market turns south for any number of reasons. Since 1926, the overall US stock market has earned about 10% per year (before expenses). So, a casual observer would think that many, if not most, years would show returns between 8% and 12%. To illustrate, if you had a bowling average of 180, most of your games would probably be between 160 and 200, right? Wouldn’t that be nice if the stock market would do that? The attached chart shows that only 6 years out of 95 have been average. Absorb that frustrating reality and realize how difficult staying the course can be in the face of catastrophist journalism that serves to exacerbate Americans’ fears, especially during market downturns. Now perhaps you can see why come Americans did not build substantial wealth over the past incredible 12 years.

We are beyond grateful that our clients have accepted our coaching during market corrections. Some, but not many, have taken corrective action and moved a portion of their portfolios out of stocks and into various safety nets during market turmoil, but very few have taken everything to the sidelines.

You will notice that I haven’t mentioned current events, politics, or our divided country. This horrible division grieves me greatly because I love our country beyond measure. So, I choose to do my best to live by this part of Pastor Reinhold Niebuhr’s Serenity Prayer:

God, grant me the Serenity
To accept the things I cannot change...
Courage to change the things I can,
And Wisdom to know the difference.

We have consistently told our clients that we believe equities will continue to lead the way forward as the best way to build wealth without working. Yes, we will suffer those frightening dips as an inevitable price we all pay to earn favorable returns over time.

I want you to know how proud we are of all of you who maintained your finely crafted investment plans in the face of adversity. You accepted our coaching during the bad times, and you have been rewarded. We are so grateful you have chosen to trust such a large part of your financial future with Atchley Financial Group.

Let’s make 2021 our best year ever!