Your Survival Guy

Preparing your investments and family for when disaster strikes.

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Do You Remember When NASDAQ Dropped by 82%?

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If you’re not a client of mine, and know someone that’s loaded with tech stocks, help them take a look at the overlap in their portfolio. Have them look at their mutual funds and ETFs, and read the prospectus. Look at the top ten holdings. Chances are they’re all loaded with the same small group of GROWTH stocks. Remember, even trees don’t grow to the sky. There’s a shelf life, there’s a limit.

If you stick with a VALUE approach (you are if you’re with me) then you’re building in discipline, like a New Year’s resolution, by sticking to a plan. Combine this approach with the Prudent Man rule, and you have a nice one-two punch. It wasn’t that long ago when NASDAQ declined by 82%, and a lot of these GROWTH guys never saw it coming. And they weren’t there to clean up the mess either.

Over time, value has always beaten growth. But it takes patience and time to let this past truth become reality. There are no guarantees about the future. When one pays less for the same dollar of earnings (or Value), though, what approach do you think puts more money in your pocket?

Action Line: Finding the right value stocks and then finding the right temperament to see them through thick and thin is one of the most difficult things for investors to do. It’s hard to watch Tesla stock turn into your neighbor’s Model S based on government tax credits and irrational exuberance.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com