From a recent survey conducted by Franklin Templeton Investments at the end of March, you would think it’s a secret that the markets were “UP” last year. Although the S&P 500 was up roughly 26%, and the Dow Jones Industrial Average finished up about 22% in 2009, 66% of the participants responding to Franklin Templeton’s survey believed the markets to have been either flat or down last year. The survey was only given to 1000 participants, but that is an amazing percentage. Two out of three people believed last year’s fairly large returns didn’t happen or were negative.
There are many possible reasons why this is so. The poor performance of 2008, extending into the first part of 2009, left a nasty taste in investors’ mouths, making it hard to swallow any medicinal good news. In addition, many people sold their market investments at or near the bottom in order to “get out”, leaving a recent, painful loss in memory. And when you top it all off with the countless advertisements of insurance products and annuities, selling “The Lost Decade” remedies and guaranteed lifetime checks, I wouldn’t be surprised to find three out of three respondents believing the markets have always, and will always, be down.
To find matters worse, 57% of respondents believe stocks are too risky of an investment, and not only that, 50% believe stock investment opportunities are better outside of the United States (including 61% of those aged 18-34!). A quote from Lady Windermere’s Fan by Oscar Wilde puts this nicely: “We are all in the gutter, but some of us are looking at the stars.”
One of the biggest things our economy, our markets, and our country needs is for more of us to crawl up to the edge of the gutter, and get some of those beneath us to come up and look at the stars. Confidence, or one of those “Animal Spirits” as coined by John Maynard Keynes, is the fuel we need to get things moving in the correct direction. I hate to believe that more than half of our largest entrepreneurial age group feels investment is best sought outside of our own country.
So when you are talking investment shop with your friends, let the good word spread. The markets were up last year. The markets are up this year. For those who feel this is a reason not to invest (well the markets have gone up so much recently they can now only go down…), step back and put things into context. Historical market reviews are easy to find anywhere on the internet. You will be surprised to find the number of up years versus down years there are (especially up decades versus down decades). And for those of you who may require more “hard” data, I recommend reviewing our five year forecast, posted to our Special Reports back in January.
Anderson Griggs & Company, Inc., doing business as Anderson Griggs Portfolio Management is a registered investment adviser with the US Securities & Exchange Commission. Pursuant to laws and regulations Anderson Griggs also maintains notice filing with several individuals state regulators including North and South Carolina. Anderson Griggs only conducts business in states and locations where it is properly registered or meets state requirements for advisors. This commentary is for information purposes only and is not an offer of investment advice. We will only render advice after we deliver our Form ADV Part II to a client in an authorized jurisdiction and receive a properly executed investment Management Agreement. Any reference to performance is historical in nature and no assumption about future performance should be made based on the past performance of any Anderson Griggs Investment Objective, individual account, or index. The authors of publication are expressing general opinions and commentary. They are not attempting to provide legal, accounting, or specific advice to any individual concerning their personal situation. Anderson Griggs Portfolio Management's office is located at 113 E. Main St., Suite 310, Rock Hill, SC 29730. The local phone number is 803-324-5044 and nationally can be reached via its toll-free number 800-254-0874.