Experts like Morgan Stanley and Barclays bank state investors should look forward to low returns only going forward. These claims are based on the 50/50 stock bond portfolio model depicted in the image below.
Right off the bat, we can state that this kind of thinking falls under the category of Rubbish. What these experts should have said was the following; the dismal results are based on this outdated model. If the model is changed, the results could vary significantly. In fact, if you change the model the results can move from paltry to outstanding.
Making money in the markets has never been easy, only because too many people rely on talking heads like this to either manage their money or provide them with investment advice. It’s like asking a shark not to give up meat and eat veggies only; the masses are sardines, the big firms on Wall Street are the sharks. You can figure out how the story ends.
Making money in the markets could be a lot easier than you think, but you need to take control of your investment decisions and not rely on these scoundrels for advice.
Simple Game Plan to achieve, Splendid stock returns without 50/50 stock bond portfolio
- Don’t pay attention to talking heads, so-called experts and all popular media.
- Invest less money into bonds, the 50:50 ratio is a thing of the past. One good option
- Identify strong sectors. You can do that by looking at sector heat maps, or you can go to sites like Investor Business Daily and look for sectors that are breaking out. You could also go to Finviz.com and screen for strong sectors though in general it is easier to use stock screening sites to find the strongest stocks.
- Once you have identified new sectors that look ready to breakout, you can use a stock screener to spot the strongest stocks in that sector
- Do not focus only on traditional assets; look for companies that are experiencing strong growth and where quarterly earnings are trending upwards.
- Do not focus only one-time frame; spread your money into long and long term trades.
- Use options to boost your returns: if you are young, you can put aside some money to speculate on stocks that appear poised to breakout. However, wait till you have locked in some profits from stock trading before jumping into options. Older individuals can still trade options but instead of buying them, the emphasis is on selling puts and calls, both of which just as safe as buying stocks. If this strategy is implemented properly, one can lock in gains of more than 30% per annum.
The only thing that is mediocre is the model that was used to come out with these claims. If investment firms have no way of adjusting to the changing times, then why do you need them, if all they can do is deliver low returns. Don’t listen to these talking heads, take control of your money or someone else will. Stop listening to the so-called experts and take control of your money. The only weakness we see is the advice that so-called top firms are dishing out to their clients
Other articles of interest:
Bonds will not crash in 2015 (Nov 23)
Is Crude oil headed higher or lower? (Nov 20)
Is the Dow going to crash in 2015 (Nov 18)
Market Timing Does it work (Oct 2)