Last week I watched a TV program on the legend of Bigfoot. So many people are still convinced that it exists! The vastness of the wilderness allows hope to spring up that some prehistoric or otherwise unique critter could be hiding out.
The same hope for existence is true of other mythical creatures: the yeti, the Lochness monster, and successful portfolio diversification.
It's amazing to me. The lengths that institutions will go to protect the status quo is astonishing.
And the vastness of the markets, much like expansive wilderness, serves to give people hope that myths like diversification work.
An article published by the venerable behemoth Fidelity Investments made me laugh out load recently. In an effort to keep folks clinging to their "buy and hold" mutual fund strategies, they made this laughable claim: "Diversification didn't fail in the recent market downturn. It worked--just to a lesser degree."
And they claim victory from this? They must be the same knuckleheads that believe in Bigfoot.
This is the promise of diversification--slightly smaller losses in bad times and substantially reduced gains in good times. Read that line again because it's worth repeating and is statistically valid since modern portfolio diversification was invented.
The bottom line is that mutual fund companies and almost all financial advisors are stuck defending a model that is broken. They do it for reasons discussed on my homepage. Buy and Hold strategies just do not work in markets that we have seen in the past 10 years. Buy and Hold is an outdated way of managing people's portfolios. And the mainstream retail financial community will not admit it because they have a vested interest in propagating the myths that surround Buy and Hold. They will continue to publish ludicrous articles that claim victory where none exists as long as the regulatory structure and plain old inertia keeps them clinging to a broken and outdated model.
One of the worst parts that the younger generation misses sometimes is that even if the market does make a new high in the next 5-15 years and the buy and hold bails the younger investors out, it won't bail out those that are in the middle of retirement right now.
No one, not me or your financial advisor, care about your money like you do. The sooner you learn the trade and invest for yourself the better. After you learn my system it only takes 10 minutes per night. Or you can cut that down even more by following my nightly trades on my member's area blog.
Please call or email my office anytime.
Helping you retire on time,
Big A
800-743-0385
www.ETFTrendTrading.com
Required risk disclosure: Past performance does not guarantee future results.
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