I exercise regularly; going to the gym, mountain biking and doing some CrossFit.
I like to be active.
I consume a lot of protein to keep the muscles in my body growing and strong.
On occasions when I open a large jar of protein powder expecting it to be full, near to the rim, disappointingly the jar is only half full.
It’s kind of like opening that bag of chips (baked of course) at lunch time and seeing only a few chips at the bottom of the bag.
What is perceived on the outside, the packaging, is enticing to get us as consumers to buy.
But, what’s on the inside can be less than fulfilling.
Whether protein powder or a bag of chips, we are often deceived by what appears to be an abundance of something.
However, when we really dive into the details of what’s actually there, we can be left disappointed.
We might even feel mislead because we didn’t get what we thought we were going to get.
This experience is very similar to stock market returns.
What is shown to investors is usually an inflated rate of return.
It’s called an average.
On the outside it looks bigger and better than it really is.
Today, I want to present a follow up to an article I wrote called The Bull Market Fallacy.
The reason?
Because the 2015 numbers are in and they aren’t pretty!
You can read that article here.
The seven years of a “so-called” bull market are over. After 2008, what seemed to be a bull market was not.
In 2008 the stock market had a massive crash. The Dow Jones Industrial Average lost over 30%. The S&P 500 lost over 38%. It was brutal for millions of Americans who saw their portfolios dwindle, some even cut in half.
Here we are in February of 2016, 8 years since the crash of 2008. The Dow Jones Industrial Average has plunged since it’s opening of 2016.
From 2009 through 2014, Wall Street and most financial advisors were saying it was a bull market.
And, on paper, it looked to be true.
The truth however, like the near empty bag of chips, leaves a lot to be desired. Let’s look at what really went on during those years.
This time we’ll be looking at the Dow Jones Industrial Average (DJIA) instead of the S&P 500.
If you had $1,000,000 in the stock market in 2008, the DJIA lost over 30% that year.
Your balance would have dropped to 693k. A loss of 307k.
- In 2009, the DJIA went up 17%.
- In 2010, the DJIA went up 10%.
- In 2011, the DJIA went up 6%.
- In 2012, the DJIA went up 8%.
These returns look fantastic.
But it takes these full 4 years of positive returns just to get back to even!
In 2013 the DJIA returned an impressive 22% and in 2014 a positive 8%.
Finally, 6 years later, the account balance is $1,367,000.
That means it took 4 years to recover and a total of 6 years to earn 367k.
Do the math.
This does not translate to a bull market.
The actual return over this 6 year period of time is only 4.5%.
This appears to be a lot more bear than bull.
Now that the 2015 numbers are in, the DJIA had a loss of -3.84%.
Even the S&P 500, the “best-of-the-best” index out there had a loss of -0.73% in 2015.
These last 8 years have returned an actual rate of return in the DJIA of 3.48%, and an actual rate of return in the S&P 500 of only 4.2%.
In fact, since 2000, these last 16 years, both the DJIA and the S&P 500 have an actual return of only 2%.
Realize also that fees and taxes will need to be deducted from the 2% rate of return.
The net return will be much lower than 2%.
What is perceived on the outside, the “average”, looks bigger and better than it really is.
The bull market numbers are about “averages”.
They aren’t real.
Once all the eroding factors are exposed, it comes down to an “actual” return.
- What really happened to my money?
- What is the bottom line?
Discover the truth about these questions.
Then discover what you can do differently, because there is a better way.
Working with clients all across the country, I see too many people mindlessly investing money into the stock market through a 401k, IRA, or brokerage account, not understanding what their actual return will be.
If they did, I don’t believe they would be putting money into a system without guarantees, without predictability, and without certainty.
It’s your money.
High cash value whole life insurance is a permanent tool that gives you life-long security with a guaranteed rate of return.
- The growth is locked in and won’t be lost.
- High cash value whole life gives you predictability and certainty.
- The cash value is liquid.
- You can access it when you need it, without a penalty.
Don’t be surprised by the misleading information put out there by Wall Street or financial advising news.
That misleading information can leave you feeling about your stock market investments like that near empty bag of chips or jar of protein powder.
It’s no bull, it’s mostly bear.
A high cash value whole life policy can assist you in having much, much more.
Sincerely,
Barry Brooksby