Joshua Krafchick from 369 Financial, gives a 3rd quarter investment update.
During this year, the markets have been dominated by technology companies that have caused the stock market to continue to rise. However, the unsustainable growth of some of these organizations could cause prices to come down when investors begin to take profits. Or when these companies' earnings aren't strong enough to keep the price moving forward like we've seen with $GOOGL & $TSLA.
When events like this happen, it causes ETFs that follow the index to become overpriced when you look at what they are trading relative to their earnings. And that's the key item to remember.
The market is forward-looking. Whether the outlook is positive or negative. So right now, there has been a good amount of positive news, so
that may cause the market to become "over priced." How do we know when the market is overpriced?
Well, that's why we consider Price to Earnings Ratios. Of course, a company can be an expensive purchase, but it still performs well, no doubt about it. However, we don't want to place ourselves in a position where we are getting greedy and not considering taking some profits to reallocate money into other opportunities that are undervalued.
During these cases, the indexes typically do very well and that could cause well established companies to underperform the market as a whole. For example, as of July 26th, 2024, the Walt Disney Incorporation over the past 5 years has seen a negative 38% return. Really bad...
Investing, requires us to look at the big picture. Since January 1, 1985 $DIS has seen an increase in value of over 5000% as of today. I think anyone would be happy with that return during that time.
Unfortunately, the human mind can be our worst enemy and with the recent downturn of Disney, if you had $1 Million before they started to decrease in value, now you would have "lost" about $380,000. Scary?
Yet, what you always have to realize and keep in mind is that you must look at how far you've come from where you started, not look at where you were at the extreme high points. This will cause any investor to lose their mind because it's a very pessimistic point of view.
Positive in this Example: You have seen your investment return 5000%!
Negative in this Example: "I'm down $380,000"
Essentially, if you had invested about $20,000, you are now up to $620,000. That's a huge win and a great investment. Yet, as time goes on sometimes people's view on the world gets jaded. And that is what ends up being detrimental to the overall success of investors, especially as they get closer or enter their retirement year.
Website: www.369financial.com
***Disclaimer***
Investing in securities carries inherent risks, including the potential loss of principal. Past performance is not indicative of future results. Investing in foreign markets entails additional risks, including currency fluctuation risks. The content provided on this Podcast channel is for informational and educational purposes only and should not be construed as financial advice. Always consult with a qualified financial professional before making any investment decisions.
