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Empower Your Wealth: Unveiling Investment Insights For Long-Term Prosperity

January 8, 2024
By Michael Moreland
Retired Vice President of Investments

One of the standards of the investment world is the year-end forecast.  Nearly all firms set forth their views for the new year (as do we).  Some come to pass, many do not.  As Warren Buffett once said of the stock market, ‘I can’t tell you what will happen in the next six months.  I can tell you with absolute certainty what will happen in the next twenty years.’ 

There’s a lot of truth in this statement (as in everything else Mr. Buffett says).  Near-term forecasts are hit-and-miss.  And, in addition to the accuracy factor, few investors have only a one-year time horizon. Confusing near-term tactics with long-term strategies is a sure way to buy high and sell low.

Why Forecasts Matter

So why pay attention to these writings?  First, they give you an idea of how your manager sees the world.  Second, and more important, they provide you the opportunity to ensure that your manager’s actions are congruent with his/her views of the market.  If so, it builds confidence in your commitment.  If not, well, it’s time to have a conversation about your goals and their fit with the manager’s words and actions.

An example: your manager believes popular technology themes are overvalued yet holds the bulk of your equity exposure in an S&P 500 index fund.  On the surface, no problem – you own 500 different companies.  However, the top ten holdings in the S&P 500 index – nearly all technology names – comprise about one-third of the index value.  The index has never been as concentrated in technology as it is today. 

If your U.S. equity exposure is in an equal-weighted index fund (each holding is the same percentage of the total fund value) or holds separate international and small capitalization positions (much more conservatively valued today than the S&P 500), your portfolio is better aligned with professed valuation concerns. 

In sum, don’t be afraid to ask questions.  It’s your  wealth entrusted to people who work to help achieve your goals.

All in all, year-end forecasts are an excellent lead-in to deeper conversations as to how your manager approaches his or her work for you.  Our outlook for the new year – and beyond – is embedded HERE.  Please take time to read it and then set up a time for us to discuss how our management works to your benefit.  Your success matters to us.

About the Author

Michael Moreland

Mike Moreland is an advisor to the Wealth Management division, and former Vice President of Investment Services at Security National Bank. With more than 45 years of Wealth Management experience, along with his Sioux City roots, Mike has a rich background in finance and Siouxland.