I’m in a ‘debate’ of sorts with some fellow financial planners about using an ‘arbitrary’ date to analyze mutual funds.
The dates I choose are 1/1/2000 to 3/9/2009 to demonstrate downside markets. 3/10/2009 to today to demonstrate upside. You literally can not get a better picture of downside risk protection and/or upside capture than these two time periods, almost as if it were divine.
Unfortunately, a lot of professionals don’t know market history. And so the folks I”m debating accuse me of using arbitrary and cherry-picked dates.
That is not good. It’s not good for the profession as a whole and certainly not good for the consumers who rely on us, the professionals, to know a thing or two.
It’s actually been my experience that many a “pro” will spend an inordinate amount of time on ESPN fantasy football and only know the markets by what he/she is told from his bosses at the firm.
This bothers me greatly. The profession of offering financial advice is only as good as our weakest link. And if our weakest link doesn’t know market history, our profession will always struggle to be taken as seriously as it should.
So, for those seeking financial guidance, from a professional, let me give you something to chomp on as you do your research on whom to employ.
Ask this two simple questions; “What happened on March 9, 2009? And why is that date so important?”
Any student of the business will at LEAST be able to recite without a second hesitation that this was the date the market bottomed. Now, they might not know why this specific date was the bottom. I’ll forgive that ignorance to some degree. But if they don’t know at least this date for it being the floor of the worst market decline in our lifetimes, that’s a problem.
So, why did the market bottom out on this specific date, you may ask. Well, as much as I disagree with Barney Frank on pretty much EVERYTHING he was a pragmatist. Oh, don’t get me wrong, Mr. Frank was a liberal’s liberal. But he also wanted to get things done. And on this date he got stuff done and we are ALL wealthier because of him.
I’d invite you to read this article by an economist named Brian Wesbury. In fact, I’d encourage you to read EVERYTHING from Wesbury. If he writes something, you should read it. I do.
You can’t help but be optimistic once you read his work. Brian knows that things are better today than they were last year and the year before and the decade before that and so on, politics be damned. He was optimistic under Obama and he’s optimistic under Trump.
But politics can get in the way. The mark to market accounting rule was one of those times. But thanks to Barney Frank it was dealt with on 3/9/2009 and as you can see by your own portfolio growth, the rest is history.