The Crash Callers Won’t Save You, How To Protect Your Investments with Buffer ETFs, and A Few Laws of Getting Rich
The Crash Callers Won’t Save You
Stock market bears are correct once in awhile.
When they are, they look like geniuses.
John Hussman first predicted a 40 to 50% crash in 2013. And in Oct 2023, he predicted that the S&P 500 would crash by 63%.
Too many people get spooked out out of the market after listening to these predictions.
But how often do these crash callers get it right?
According to historical data, not that often.
Since 1950, the S&P 500 suffered a peak-to-trough drawdown of 40% or worse 2.4% of the time.
In the last 75 years, the market has been in a bear market (down 20% or worse) nearly 17% of the time. This is more than double the time spent at all-time highs.
Investing in the stock market requires becoming comfortable living in a state of drawdown a lot of the time.
This is why investing is 80% psychology 20% skill.
It requires you to have the stomach to handle drawdowns, while ignoring the noise outside.
Read more: https://awealthofcommonsense.com/2023/10/the-crash-callers-wont-save-you/
How To Protect Your Investments with Buffer ETFs
No one likes seeing red in their portfolio.
Introducing Buffer ETFs, a new product that offer investors downside protection.
The beauty is that it offers investors the flexibility in determining the amount of protection needed.
Not only does a buffer ETF offer downside protection, it also gives us upside potential. But this upside potential is capped at a certain amount.
I like to think of it as a covered call, but with more downside protection.
With a covered call, you cap your upside while reducing your losses to the premium collected (i.e. downside protection).
With a buffer ETF, you cap your upside, while also protecting your downside up to a certain amount.
To play devil’s advocate, these buffer ETFs have underperformed the S&P 500 historically.
I likely won’t use them but people who cannot live with market drawdowns may be inclined to.
Read more: How To Protect Your Investments With Buffer ETFs
A Few Laws Of Getting Rich
One of the best, if not the best article from Morgan Housel.
Money may solve most problems, but not the problem of unhappiness.
People like you more when you are working towards something, not when you actually have it.
The richer you become, the less likely people will disagree with you (no matter how dumb you may sound).
We can’t let of habits that’s been so deeply ingrained in us. It’s why people who have been frugal since young have problems spending down in retirement.
Rich people with children have to make a decision between 2 tough choices: Ruin their ambition with inheritance, or risk some form of strife by denying them an easy life.
Easy money disappears quicker than hard-earned money.
People tend to want to associate with winners and avoid losers.
As income rises, expectations and spending tend to rise in tandem, spiralling out of control.
No one will remember you in 100 years, so just do what makes you happy.
Read more: https://collabfund.com/blog/a-few-laws-of-getting-rich/