If you wanted to justify any investment move your mind is contemplating right now, you had no problem finding confirmations and explanations for almost everything at the Morningstar Investment Conference earlier this month.
Among the posts that might have made your head spin at the venerable investment forum, which has been bringing investment professionals (and me, too) to Chicago since the mid-1990s, were these chestnuts:
“Buy only from domestic companies.” “Focus entirely on mega-caps.” “Don’t play with your wallet right now; hold on tight. “Bond yields are up and bonds are once again a safe haven.” “Put a slug of your cryptocurrency wallet.” “Use dividend-paying stocks – rather than bonds – to generate income.” “Dividends are attractive in the United States” “The best deals in the world are in foreign markets. “The small cap rally is about to begin.” “Bonds can’t keep up with inflation, they’re dangerous now.” “Dividends are more attractive in emerging markets.” “It’s a good time to clean up your wallet.” “Cryptocurrency is not a real asset.
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Each expert statement apparently had an equal and opposite counter.
It sounded like the old British comedy sketch about investing in times of great financial crisis, which went like this: “Market participants don’t know whether to buy on rumor and sell on news, do the opposite, do both or neither depending on the direction the wind is blowing.
There was a hidden message in the middle of these soundbites at Morningstar, however, and it goes like this:
You’re not looking for “the only right way to invest”, rather you’re trying to find the one that’s right for you.
“Just for you” has many permutations and conditions. This usually – but not always – avoids excesses, as you have to live with and accept the results and consequences of your decisions.
But it comes together in a very convenient way at an event like Morningstar.
If foreign markets make you nervous, for example, there was David Giroux, manager of T. Rowe Price Capital Appreciation (full disclosure: I’m a long-time investor in the fund), saying there’s no value in owning international stocks, investing in emerging markets and owning something other than investing in US stocks.
He made a strong case, noting that multinational corporations headquartered in America still derive much of their revenue from international operations and sales; he prefers to get his international exposure that way, and an “America-Foreign strategy” of buying U.S. stocks with large foreign operating units has long been a popular option.
But David Lubchenco of the Chautauqua International Growth Fund — in one of several conference interviews that aired on my “Money Life with Chuck Jaffe” podcast — countered that investors have many reasons to put money to work there. Internationally, especially that diversification The benefits of investing globally are clear, especially in troubled times like now.
A simple comparison of national indices with global indices that exclude national stocks shows that markets operate in cycles. Lubchenco says that while domestic equities have led the way over the past decade, he doesn’t think they likely will over the next 10 years.
There is also the simple appeal of “owning the best [companies/bargains/values] in the world.”
All the other arguments I heard at the conference could be part of a similar two-way conversation, with fans and haters alike.
What I heard from people at the Morningstar conference and from my show audience was, “Who’s right?
Ultimately, we won’t know for years, and that winner will depend on how we determine the contest. (Best absolute performance? Most consistent returns? Best risk-adjusted results? Did you achieve your goals by following the strategy?)
Rather than looking for the winner, instead look for the right strategy for you, one that allows you to sleep at night confident that you are well invested, overcome current events and conditions, and have a high degree of probability that you will reach your financial goal. Goals.
It probably won’t be an all-or-nothing approach, but it doesn’t have to be a diversification deal to own it all either.
I left Morningstar’s investment conference this year thinking about how current economic conditions and the myriad investment ideas presented there – but also in the everyday financial media right now – could make investors vulnerable to take action based on what is happening now without considering the impact it might have. their long-term results.
The idea behind investing is not so much to avoid today’s difficulties as to achieve tomorrow’s goals.
If the headlines and your account statements bother you, think carefully about how you might adjust your portfolio, your investments and your attitude.
Remember that there will be someone on the other side of your trades who disagrees with you (otherwise they wouldn’t buy what you’re selling or sell what you are looking for). If you feel like things are spinning, slow down; don’t be afraid to do nothing until the feeling passes.
Don’t worry about the number on the account statements and more about having a strategy you can live with as it takes you beyond the goal line. Your strategy is the right one, as long as it gets you there.