Wisdom from the Nomad Investment Partnership Letters
Impactful learnings on long-term investing from a collection of letters, written by Nick Sleep, during his time running the Nomad Investment Partnership.
The Key Question Is - How Many Things Does the Fed Actually Have to Break
Inflation remains high, the tremors are getting more severe. Jim Bianco, founder of Bianco Research, says why he fears more turmoil in the markets as monetary policy tightens, why the risk of recession is significant, and what signal he’s watching for to gauge when the worst is over.
The Worst Years ever for the U.S. Stock Market and What Happened After
The S&P is in the midst of an 18.6% drawdown from its all-time high on January 3rd, 2022. Going back to 1928, there have been 11 double-digit annual losses for the S&P. The worst years have occurred during market crashes, war, or economic upheaval. Unfortunately, in the year 2022, we have seen a little of each of these categories.[1]
Below is a list of the worst annual returns in the market, the event tied to the downturn, and how the market reacted in the following years.
Source: awealthofcommonsense.com, May 22, 2022
The one year returns are decent, not great. The average returns were 6.4% while just 6 out of 11 times performance was positive. It’s rare for the stock market to fall two years in a row but not out of the question. It has happened 8 times since 1928. The problem is, most of the time when it happens, it occurs around one of these awful years. Stocks fell 4 years in a row from 1929-1933. Then they fell 3 years in a row from 1939-1941. It didn’t happen again until 1973-1974. The next time was from 2000-2002. Those are the only times the stock market has fallen two years in a row or more. [2]
Could the current situation turn into one of the all-timer kinds of market crashes? It's certainly possible, we are dealing with our-decade high inflation, war, a pandemic, labor shortages, supply chain issues, Fed tightening, and more. Here's the good news, the longer-term returns after the worst years ever are pretty good. The average 3 year forward return is +35%. The average 5 year forward returns is a gain of almost 80%. There was only one 3 year period with negative returns following a poor down year and it was in the aftermath of the Great Depression. Every 5 year return following one of these dreadful down years saw positive returns. [3]
We can't predict what will play out for the rest of 2022, but what we do know is our portfolios are positioned for the long-term. GPM focuses on high-ROE businesses with track records of delivering rewarding long-term growth in sales, earnings, cash flow, dividends, and ultimately stock prices. Our companies are built to adapt and thrive while generating growth in value and income for shareholders. Our strategy gives us confidence to ride out market pullbacks and is well understood by our clients, who share our long-term view.
Taking Charge of Your 401k
The average American employee switches jobs 12.3 times before retiring. Here is some helpful advice on what your options are when it comes to dealing with old employer plans.
Google Lens comes to Chrome for searching using images from webpages.
Google has been working to better integrate its visual search tools from Google Lens into its browser to enable new types of searches that can identify what you see, not just search for things you type. Today, Google is rolling out a new way to use Google Lens on the desktop. Instead of opening a new tab to perform a search, you’ll be able to use Lens on the same page in your Chrome browser to do things like translating an image’s text, identifying an object in an image, or getting the original source from an image. [4]
How will working affect Social Security benefits?
It's not an uncommon question that we receive here at GPM. In fact, a recent survey suggested that 68% of current workers stated that they plan to work for pay after retiring. Learn the important factors that play a part in making sure you receive your maximum benefits.
A guide to Michigan's boating laws: What you need to know.
There is a reason that Michigan is among the leaders in the nation for registered boats. With four of the five Great Lakes surrounding us, 10,000 inland lakes and ponds, and a 35,000 mile web of rivers, streams, and wetlands, it is important to know the rules while on the water. Here is what we think you need to know if you’re heading out on the boat anytime soon. [5]
Projected COLA increase for 2023 is largest increase in history.
CBS News reports that the COLA increase for 2023 is projected to be the biggest ever, with an advocacy group working to get an 8.6% increase.
The typical monthly Social Security check is about $1,658, which means beneficiaries could see an increase of $142.60 per month in early 2023, bringing the average check to about $1,800, according to a new forecast from the Senior Citizens League.
That projection is based on the most recent U.S. inflation numbers, including the government's release on Wednesday of Consumer Price Index data for April, said Mary Johnson, Social Security and Medicare policy analyst for the group. The CPI, which tracks a broad basket of goods and services, rose 8.3% in April from a year ago, down slightly from an 8.5% annual increase in March. [6]
Footnotes and Sources
1. awealthofcommonsense.com, May 22, 2022
2. awealthofcommonsense.com, May 22, 2022
3. awealthofcommonsense.com, May 22, 2022
4. techcrunch.com, May 24, 2022
5. clickondetroit.com, May 25, 2022
6. CBS News, May 12, 2022