Avoid These Five Parts Of The Market

avoid these 5 parts of the market

Avoiding what is falling or weakening is as important, if not more important, then buying what’s going up. But when you are taught to diversify over 15 ETFs or more you add complexity to your world. Which means you are going to miss the signal to get out when it happens. And you’ll be owning parts of the market that are making you poorer. Ya get it?

Diversification adds confusion. 

The very nature of diversifying over 15 sectors/segments/stocks (or more) is to say,  “I have no idea what’s going up or down, so I’ll just buy and hope more of what I own helps me, then not.” 

Here are five parts of the stock market that have been making people poorer. In all the charts below the blue line is the S&P500 with dividends reinvested. The red line also has dividends reinvested too.

#1 Small Cap Stocks…

Small Cap Stocks (IJR) vs The S&P500 (IVV)

Over the past year small cap stocks are down -6.5%, while the S&P500 is up 10%. And just so you know, there’s no law that says small caps have to turn around and outperform for this market to go up another 30%. They can lag for years and years and years… as you’ll see below with other parts of the market. So stop following people that are bashing what’s going up.

IJR vs IVV

#2 Value stocks…

Value stocks (SPYV) vs The S&P500 (IVV)

Over the past 11 years, value stocks are up 315%, while the S&P500 is up 403%. Not the worst offender on this list but what’s particularly bad is how value’s underperformance is accelerating. Notice how the gap between the two lines is widening.

SPYV vs IVV

#3 International Stocks…

International Stocks (VEU) vs The S&P 500 (IVV)

Over the past 8 years, international stocks are up 26%, while the S&P500 is up 154%. You may just want to read that sentence again. I can guarantee you that almost everyone that has a big-box advisor managing their money has 20% to 30% of their portfolio allocated to international. And it continues to hurt them. Again, there’s no rule of investing to say international has to start to outperform US domestic.

VEU vs IVV

#4 The Financial Sector…

The Financial Sector (XLF) vs The S&P500 (IVV)

Since the market top in October 2007, the financial sector has grossly underperformed. For 12 years the Financial sector is up a total of 20%, while the S&P500 is up 139%. Apparently the market doesn’t need financials despite what you’ve heard. There are 11 sectors to the market and it doesn’t need all of them to participate. Please read that last sentence out loud.

XLF vs IVV

#5 China…

China (FXI) vs The S&P500 (IVV)

With all the hoopla surrounding China they have grossly underperformed the S&P500. Over the past nine years China (FXI) is up 15%, while the S&P500 is up 191%.

But these are not the only offenders. 

I have students that have taken my training who live in the UK. And they have learned to stay out of the FTSE 100 (UK’s equivalent of the S&P500) and it has paid. The UK stock market is up 125% compared to the S&P500’s 370% over the past 10 years. 

Same goes with my Australian students. And Canadian students. And any country around the world where you can buy your own country index and/or the S&P500 index, which is most countries. 

I can train you to be the best investor you know. 

I can train you to avoid those huge losses (read: 2000 and 2008). 

I can train you to know the difference between a crash and correction.

I can train you to avoid all the underperforming sectors. 

I can train you to only be invested in the leading sectors of the market. 

I can train you to do what you are supposed to do. AND actually do it.

Look, most of you probably know what to. 

And honestly, how much has that been able to help you? 

Be honest.

The point…

You can still do something about this. 

It’s not too late. But when the recession hits it will be. And your solace will not be found in another pick of the month newsletter or your well diversified portfolio.

Stop lying (to yourself?). And stop hiding. 

Now’s the time to take control back over your future. And I can help you. I can train you to do what you are supposed to do. When you are supposed to do it.  

Let’s jump on the phone. And really get under this thing that is not working for you. So your next ten… or twenty or thirty years can be your best. Let’s get on the phone, so you can learn what your money is trying to tell you. Connect with me here. 

In Your Corner,

RCPeck-Dig Signature.JPG

RC Peck, CFP

PS – Two things I thought you might like…

  1. How social media has taken over since 2000. The numbers of people on social media is staggering. Why am I so against social media? Because it’s about posturing, “see who I think you want me to be so you can like me more than I like myself…”  https://twitter.com/ThingsWork/status/1140615347864834057?s=20
  2. Kindness is the most powerful superpower I know. And yet people think kindness is weak. Here’s a great story about the kindness of strangers and how lives are changed from it and not despite it. https://www.albertbridgecapital.com/drew-views/2019/6/17/stay-in-the-game

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