Your Survival Guy

Preparing your investments and family for when disaster strikes.

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These Stocks Just Crossed an Ominous Threshold: Your Neighbor Probably Owns Them

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You can read here about the late Jack Bogle’s concerns with index funds. Now they’ve crossed an ominous threshold: The market cap of the top five companies in the S&P 500 Index represent 18% of the total index capitalization, higher than at any time on record, including the Tech Bubble. Those companies are Apple, Microsoft, Alphabet (Google), Amazon, and Facebook.

When mutual funds and ETFs have a mandate to buy an index of stocks, like those in the S&P 500, research and analysis go out the door—there’s zero analysis—because the purchases are required. In replicating an index, the largest capitalization stocks come to dominate a portfolio. With the S&P 500, it’s the largest five that play the music—the rest are just groupies.

Before the music stops, perhaps you should seek an approach where stocks are picked according to their individual value.

Twice in this century the S&P 500 has crashed—first by more than 49% when the Tech Bubble burst, and then by more than 56% during the Financial Crisis. Perhaps it’s time for a change.

Retirement Compounders® Investment Program Helps You Stay the Course

Young Research’s low-risk Retirement Compounders® program helps investors avoid the emotionally charged investment decisions that can sabotage returns. When financial and economic stress arise, investing in high-quality businesses with long records of regular dividend payments offers the comfort and confidence necessary to stay the course. The end result is often greater long-term returns for investors.

How has the Retirement Compounders® program performed relative to expectations?

During the last major bear market, the Retirement Compounders® program held up better than the broader market, just as it was designed to do. And since one of the most speculative liquidity fueled rallies in history began in the spring of 2009, the Retirement Compounders® program has delivered 90% of the market’s return with only about 85% of the risk.

In the time since inception, which includes two speculative bull markets and a nasty bear market, the Retirement Compounders® program performance has far exceeded expectations. The chart below shows that since inception, the Retirement Compounders® program has outperformed the MSCI All-Country World Index (ACWI) and the S&P 500.

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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