Personal Finance and Investing

I have a financial advisor who has done very well for me over the 20 or so years I've been with him.

He got me into a couple of annuities about a decade ago. Annuities tend to be trashed here, and I don't fully understand why. He got me into mine, as I said, about a decade or so ago, and I started taking payouts perhaps five years ago. They give me a guaranteed income stream. I'm not likely to live long enough (age 74 at present) to outlive their value. Whatever is left over when I die, goes to my heir.

I know that there are many here reading this who are comfortable and happy to make their own decisions about what to buy and sell. Personally, I am not comfortable with that, and so I'm very happy to have my financial advisor. One thing I like about what he's done for me, is that he's minimized risk, so that I never lose as much in a downturn as the downturn itself. True, I don't do as well on the upside, but the minimizing of downside is well worth it.

Here's something he sent me recently, which is quite mind-boggling, I think.

So think about it. Nearly half the time the market has a large gain, and only a very small time does it have a big loss. And keep in mind that the past 95 years starts out before the crash of '29. Think about it.

Yes, in the decade of the 1930s, the stock market was relatively terrible, but if you'd started buying in 1930, and kept on buying, you'd have made incredible gains. Also, I recall reading (and it may well have been in the book about the crash by John Kenneth Galbraith) that during the Depression, stocks that paid dividends, were so undervalued, that they were selling at prices that made the dividend payments huge. I don't want to try to remember the percentages, but I recall they were vastly above what today would be considered and excellent dividend. But because people were terrified to buy, they went unsold.

Here's something to keep in mind: The Crash of 1929 and the subsequent Depression was a one-off. There were a lot of specific and unique things that built up to it, that really don't apply today. So every time you read something that says an equivalent crash is looming, know that's wrong. I am NOT saying a large drop in the market can't occur. Those large drops can and do happen. The downturns happen regularly. But the upturns vastly outweigh the downturns. So buying and holding for the long term is the best strategy.