February 2022

Roller Coasters: Fun For Kids, But Not For Investors

Did you have a favorite roller coaster as a kid? Mine was the Shooting Star at Coney Island in Cincinnati, where I grew up. The Shooting Star has been gone for decades, but I still remember the breathtaking rises and the stomach-churning drops.

That sensation is great for a ride, but not so good for a portfolio. And recently, it seems as if the markets have been on a roller coaster.

The market volatility and the accompanying feeling of uncertainty are real, and all investors have to make decisions based on their financial situation, expected needs and tolerance for risk. I believe strongly that no investors should take risks that make them uncomfortable or threaten their financial security. But it is important to put this current situation in context.

First, over time equities have had better returns than most other traded investments. In the 22 years from 2000 through 2021, the S&P 500 has had negative returns in only six years: 2000, 2001, 2002, 2008, 2015 and 2018. Of course, people who had not been invested in the S&P in those years would have avoided those losses. But in reality, investors are much more likely to get out of a market too late and take too long to get back in.

In addition, these are extraordinarily unusual times. The world still is going through a pandemic the likes of which we have not seen in more than a century. The effects of that pandemic are being seen in markets at home and abroad. Inflation and shortages of staffing and goods are among those effects, and it probably will take a while for the U.S. and other economies to work through this.

As always, there is no crystal ball that allows us to see what will succeed and what will falter. But in these times, as in most uncertain times, we believe that a measured approach that focuses on the long term and is based in sound fundamentals offers the best combination of protection and opportunity.

This is the approach we take at Peachtree Investment Partners. We focus on the stocks of large, established American companies that have strong and experienced leaders and that are well-positioned in their industries. We choose companies with a consistently good return on investment and a long history of revenue and earnings growth. We prefer stocks that have weathered many years of economic, political and social change without deviating from their approach and that have managed to avoid most of the market's harrowing climbs and drops. We want you to be able to sleep at night.

We also believe strongly in stocks that pay dividends. Dividends provide a shield against market volatility because all your return does not come from an increase in the stock price, and the dividend you receive is spread out over time. Choosing to reinvest your dividends can help to grow your portfolio significantly over time.

The journey from here to the end of the pandemic and a return to normal might not be quick and it might not be smooth. But we believe that it will come -- although it almost certainly will be followed by other challenges. All we can do, as investors and as people, is to prepare ourselves so that no matter what happens, we have the best chance to live our dreams and care for the people we love.

Garry K. Schaefer
February 1, 2022

Peachtree Investment Quarterly may offer general financial, insurance, tax and business ideas. However, due to the ever-changing tax laws as well as the complexity of the financial industry, you should seek professional advice before implementing any of the ideas contained in this newsletter. Peachtree Investment Partners, LLC(TM), and Osmosis Digital Marketing, Inc. assume no liability whatsoever in connection with the use of this newsletter.

© 2024. All rights reserved. Peachtree Investment Partners, LLC™ | Privacy Policy / Terms of Use | Peachtree CRS Form | CLIENTS: Charles Schwab & Company Login

Go to top