FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
September 26, 2017
What does value investing really mean? Q1 2021 hedge fund letters, conferences and more Some investors might argue value investing means buying stocks trading at a discount to net asset value or book value. This is the sort of value investing Benjamin Graham pioneered in the early 1920s and 1930s. Other investors might argue value Read More
- Investor Returns vs. Market Returns: The Failure Endures
- Census: Americans Getting Richer Across Income Groups
- New Census Bureau Data on Income, Poverty & Wage Growth
Editor’s Note
Due to the death of a family member on Friday (Mother-In-Law at age 99) and an out-of-town funeral late Monday, I was not able to do my usual reading and writing these last few days. As a result, I have included reprints of three articles I found interesting earlier this month.
The first is a new article from The Capital Spectator that summarizes the latest results from the annual Dalbar Studies – which once again found that investors acting on their own continued to earn far less than the market averages. I have written about this often in the past.
The second is an article discussing new Census Bureau data which found that Americans are getting richer across almost all income groups – very interesting. The third is another article based on new Census Bureau data showing how income and wages are growing while poverty continues to drop.
I hope you find them interesting. I’ll be back in the saddle tomorrow.
The Capital Spectator:
"Investor Returns vs. Market Returns: The Failure Endures
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The difference is especially striking over the trailing 30-year period: The average equity investor earned a hair below 4.0% a year while the S&P deliver a bit more than 10%.
The numbers aren’t any better for bonds. Measuring investor returns for fixed-income funds vs. the Bloomberg Barclays Aggregate Bond Index also reveals a dramatic mismatch in favor of the benchmark. For the past decade through the end of last year, for instance, the bond index was ahead by an annual 3.97%, a huge edge over the weak 0.40% earned by the average fund investor.
“Investors so often cost themselves money because the behaviors elicited by short-term focus are almost always irrational,” the Dalbar study explains. “While many investors set a course of action that is based on a well-planned rationale and considers the full time horizon, those plans can take a back seat when fear or exuberance sets in.”
Perhaps the most compelling lesson in the data is that investors are in desperate need of informed investment counsel. Although some folks are earning reasonable, perhaps stellar, returns, the vast majority are wallowing in various degrees of subpar results…
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The Wall Street Journal:
“Americans Get Richer
The Latest Census Data Show Economic Gains Across Income Groups
September 13, 2017
Americans have received little good news lately, but a new U.S. Census Bureau report offers some economic hope: Last year real median household income rose 3.2%, the second consecutive increase, as 2.5 million Americans rose out of poverty.
These gains might not be notable late in an economic expansion save for the fact that real median incomes declined while poverty increased during most of the Obama Presidency. In 2014 the real median household income was $54,398, down from $55,683 in 2009. By contrast, during the Reagan expansion from 1982 to 1988, poverty fell 2.4 percentage-points while real household incomes rose $4,905.
Only in 2015 and 2016 did Americans experience real income growth. As a result, there are now about six million fewer people living in poverty than in 2014. Minorities have reaped the biggest gains. Between 2015 and 2016, the median income for blacks and Hispanics climbed 5.7% and 4.3%, respectively, compared with 2% for whites. As a caveat, the Census Bureau says a change in its survey methodology in 2014 could have increased incomes.
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Fortune Magazine:
"What New Census Data Tells Us About Income, Poverty and Wage Growth
by Grace Donnelly
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Household income has increased for the second year in a row, but earnings growth is still slow. The wages Americans earn have not increased, rather income gains are being driven by rising employment levels and more combined paychecks in each household.
Income levels still haven’t returned to the levels seen before the financial crisis. Last year, median household income in the United States was $59,039 — lower than the $59,992 median in 2007 or the $60,399 median income in 2000 — based on calculations by the Economic Policy Institute using Census data.
** I’ll leave it there for today. I’ll be back home and back to my regular schedule tomorrow.
Wishing you the best,
Gary D. Halbert
BLOG: Odds For Meaningful Tax Cuts Have Improved Significantly