“Courage taught me no matter how bad a crisis gets…any
sound investment will eventually pay off.”
–Carlos Sim Helu, Mexican Entrepreneur, Investor, and
Philanthropist
Volume 18
Hiking Trails to Investment Trails
Does Luck Matter in Investing?
What Happened in the Markets
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Written By: JD Slatter
Growing up in Salt Lake City, I’ve been incredibly fortunate to enjoy Utah’s great outdoors. My love for hiking has deepened my appreciation for the natural beauty surrounding Utah. Utah, with its diverse landscapes, provides some of the best hiking opportunities anywhere. Many years ago, I stayed at a cabin near Pine Valley in southern Utah, just outside of St. George. The landscape in Pine Valley, with its large mountains covered in pine trees, contrasts sharply with the red rock deserts just 45 miles away. The tallest peak, Signal Peak, stands at 10,369 feet.
One summer morning, driven by a sudden urge, I decided to hike one of the nearby peaks, which sits around 10,000 feet. Excited and somewhat impulsive, I set off immediately without informing anyone of my plans. Armed with only one bottle of water and no cell phone—since there was no service anyway—I underestimated the challenge ahead.
Early into the hike, it became clear that I was unprepared. The trail was overgrown and difficult to follow, and the heat quickly intensified. Despite these obstacles, I pushed forward, determined to reach the summit. After considerable effort, I finally made it to the top. However, satisfaction gave way to poor judgment as I decided to hike along the ridge to the next valley instead of returning the way I came.
Unfamiliar with this new route, I soon lost my way. The ridge was more challenging than anticipated, but I continued, stubbornly refusing to turn back. Eventually, I found myself stuck on a steep mountainside, surrounded by cliffs, out of water, and without food. The sun was relentless, and I had no sunscreen. Panic set in as I realized the gravity of my situation—I had no way to contact anyone or clear path to safety.
Through sheer resolve and a bit of luck, I eventually navigated my way down the mountain. What I intended to be a quick hike turned into a seven-hour ordeal. Embarrassed and exhausted, I returned to the cabin, my ego bruised but with a valuable lesson learned.
I share this story because it mirrors the experience of investing without a plan. Just as an unplanned hike can lead to feeling lost and unprepared, investing without a clear strategy can result in fear-based decisions and potentially disastrous outcomes. The investment markets are unpredictable, and without a solid plan, it’s easy to make irrational choices driven by fear.
The impact of making fear-based decisions can be catastrophic. Remember that market volatility is expected. According to J.P. Morgan Asset Management, since 1980, in years where the S&P 500 dropped an average of 14.2%, the market ended positive 33 of those 44 years. Over the last 30 years, the S&P 500 has had an average annualized return of 8%, but if you just missed the 20 best of the market during those 30 years, the average annualized return drops to 3.4%.
Early in my career as a Financial Advisor, we had an older Advisor come speak to a group of us starting in our careers. He said something that has always stuck with me. He said, “I like to tell my clients that investing is a lot like trying to get to a destination. Let’s say you are trying to get from Los Angeles to New York. There are several ways you can achieve it. You can take an airplane, which will be the fastest way, you could drive, you could take a train, you could also even walk. The point is that as long as you have a plan and stick to it, you can get to your destination.” Some options are faster than other others but if you have a comfortable plan, you can get to your destination on your timeline.
At Atlas Investment Management, we take immense pride in crafting personalized plans for our clients. These tailored strategies are designed to equip you with the tools and confidence needed to navigate the ups and downs of investing. If I had planned my hike properly, the outcome would have been much more favorable. Similarly, a well-thought-out investment plan can help mitigate risks and foster better financial outcomes.
Written By: Stephen Swensen
Picture this: you’re at a carnival, eyeing the ring toss game. The carnival worker running the booth swears it’s all skill, but you suspect a bit of luck might help. Investing can feel similar—do you need a sprinkle of luck, or is it all about skill and strategy?
I recently listened to the podcast “Facts vs. Feelings”, in which the hosts posed a question to their guest, Professor Jeremy Siegel, who has analyzed market behaviors for decades. Siegel responded with four insightful responses, which I would like to touch on today. Let’s explore his thoughts.
According to Prof. Siegel, investing isn’t about gambling with lady luck. Staying invested in sensible investments ensures you come out ahead in the long run. It’s a perspective worth pondering—if you stick with the market, the odds are in your favor, unlike the carnival games where the odds always favor the house.
Prof. Siegel’s assertion that “in the long run, you will be a winner” hinges on the concept of time as a risk mitigator. Stock market returns are pretty unpredictable in the short term, but extend your horizon, and the picture brightens considerably. From 1923 to 2023, the market has shown positive returns in 75 of those 101 years. Short-term volatility can be daunting, but patience pays off. Over rolling 5-year periods, returns were positive 89% of the time; stretch it to 10 years, and that figure rises to 97%. Negative returns are nonexistent across 20- or 30-year spans (source: S&P 500 returns since 1923, Morningstar).
Investing in a broad market index like the S&P 500 is a solid strategy that aligns with Professor Siegel’s advice to “stay with the market in sensible investments”. The S&P 500 is continuously evolving, reflecting the dynamic nature of the economy, making it an excellent choice for longterm growth and wealth preservation. While concentrated stock positions can yield impressive gains, they often come with significant risks. Professor Siegel highlighted that only 43% of stocks outperformed treasury bills over their lifetime, and more than half delivered negative returns. This underscores the importance of our in-depth analysis and recurring due diligence on the investments we endorse—something that most retail investors do not have the time or expertise to do.
Prof. Siegel emphasized that stocks beat inflation, a critical factor for long-term investors. Stocks, being “real assets,” provide inflation protection as companies can pass rising costs to customers. Long-term earnings and dividend growth have consistently outpaced inflation, even during the high-inflation eras of the 70s and 80s. Over rolling 30-year periods, the average inflation-adjusted return for stocks stands at around 7% and has never been negative. This stability underscores the resilience of stocks as an investment.
To illustrate, from 1994 to 2023, the consumer price index (CPI) doubled, indicating an average annual inflation rate of 2.5%. Meanwhile, stocks surged by 1,662%, translating to a real annual return of 7.5%. Clearly, time and a sensible investment strategy can indeed turn the odds in your favor—making luck a less critical component.
Investing isn’t a game of chance but a disciplined journey where time and strategy play pivotal roles. By staying invested in a diversified portfolio and keeping an eye on the long-term horizon, you can harness the market’s potential to grow and preserve wealth. So, next time you think about investing, remember: it’s not about luck. It’s about making informed, sensible choices and giving them time to work in your favor.
Remember, your Atlas Financial Advisor stands ready to help you navigate these decisions. Whether you need guidance on diversifying your portfolio or understanding market trends, we’re here to support your journey toward financial success.
Equity markets had a mixed month, with the S&P 500 leading the way with a monthly return of 3.6%, resulting in a YTD return of 15.3%. However, small caps struggled, down -0.9% for the month, leading to a YTD return of 1.7%, highlighting a significant gap between US large cap and small cap companies.
Developed international markets also faced challenges in June, posting a return of -0.2% and a YTD return of 6.1%. In contrast, emerging markets had a stronger performance, returning 3.1% for the month and bringing the YTD return to 6.8%.
Overall, all equity markets are up this year, with most Wall Street analysts expecting continued positive returns for the rest of 2024.
Fixed income had a positive month, with US Treasuries and the US Aggregate Bond Index (AGG) returning 1.0% and 0.9%, respectively.
Additionally, bank loans and high yield loans posted positive returns of 0.3% and 1.0%, respectively.
Looking at YTD returns, fixed income remains mixed. Treasuries and the AGG are still down roughly -0.7% and -0.6%, respectively, while bank loans and high yields continue to show positive returns at 3.6% and 2.2%, respectively.
With over two decades of experience in financial services, JD is a seasoned professional specializing in customized wealth management and retirement income planning. Throughout his career, he has worked closely with high-net-worth individuals, families, and corporations, delivering tailored financial solutions that meet the unique needs of his clients.
JD’s passion for his profession is evident in his approach to connecting with clients on a personal level. As a wealth advisor, his primary goal is to provide the highest level of customer service, dedicating his resources to meet clients’ needs and earn their trust.
Prior to joining Atlas, JD played a pivotal role as a partner in a private wealth management group in Salt Lake City. He holds a BS degree from Brigham Young University.
Residing in the Salt Lake Valley with his wife and three children, JD takes full advantage of Utah’s offerings. He particularly enjoys engaging in activities like snow and water skiing and hiking, embracing the diverse outdoor experiences the region provides.
Stephen’s career began as a Financial Analyst for Deseret Mutual Benefits Administration (DMBA), a role in which he managed investments for a private pension fund and insurance company. Subsequently, he served as an investment analyst and portfolio manager for local Registered Investment Advisors (RIAs). Before joining Atlas, Stephen contributed his expertise as an Outsourced Chief Investment Officer (OCIO) for the Carson Group, supporting advisors on the West Coast. Educationally, Stephen holds an MBA and an MS in Investment Management and Financial Analysis from Creighton University. He has earned the Series 65 Uniform Investment Advisor License and is actively pursuing the prestigious
Chartered Financial Analyst (CFA) designation.
Beyond his professional achievements, Stephen is an enthusiastic hockey fan, both on and off the ice. He finds joy in playing the piano, golfing, reading, and outdoor cooking. However, his greatest source of happiness comes from spending quality time with his wife and four children
NOTICE REGARDING INVESTMENT DISCLOSURES: The contents of this memo reflect the opinions of the author(s) as of the indicated date and are subject to change without notice. Atlas Investment Management has no obligation to update the information provided here. It should not be assumed that past investment performance guarantees future results. Potential for profit also entails the risk of loss.
The information presented is believed to be current and is not personalized investment advice. All opinions expressed are as of the date of the presentation and may change over time. All investment strategies carry the potential for profit or loss. Asset allocation and diversification cannot guarantee improved returns or eliminate the risk of investment losses. Target allocations may deviate due to market conditions and other factors. There is no guarantee that any investment or strategy will be suitable or profitable for an investor’s portfolio. Different types of investments involve varying levels of risk.
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