I want to start another video series. This one will discuss the important topic of “Planning For Change.”
Change is the only constant in life. What goes up, must come down. Bad times transition into good times. All aspects of life move in cycles. The good times, or bad, never last forever and assuming that they will is a big mistake.
Things change in the market, as well. In fact, cycles are seen throughout market history. Today I will share just two examples:
The largest and most successful companies change decade to decade: In 1990, the three largest U.S. stocks were IBM, Exxon, and General Electric. In the year 2000, General Electric was the biggest, followed by Exxon, and then Pfizer. By 2010, Exxon was the largest followed by Apple, and then Microsoft. As of this recording, the largest stock is Apple, followed by Nvidia, and then Microsoft. Interestingly, Exxon, Pfizer, and General Electric don’t even make the top ten largest stocks today. Investors that stayed in yesterday’s winners likely ended up with lackluster performance.
Next is Market dynamics shift. In the 1980s, investors enjoyed very high interest rates. High rates proved to be positive for folks in retirement. Retirees were able to buy FDIC insured CDs, highly rated municipal bonds, and U.S. Treasuries that all garnered double-digit returns. These high rates, or yields, became the focus of many investors. Over the ensuing years, rates dropped dramatically. Folks who were still focused on high yielding investments instead of companies that have other growth characteristics missed tremendous upside potential.
In the next video, I’ll show more examples of how things change in the market and how individual investors can prepare for this inevitability.