Refocus 5-8-2020

Please check out this weeks Refocus where we help investors tune out the noise and turn our attention to the long-term perspective needed to maximizing the probability of successful investment outcomes.



Transcript:

Hi, I'm Bill Woodruff. I founded WealthFactor because investors deserve better. Wall Street in the media businesses rely on keeping you engaged. This focus on the short run is more likely to hurt you can help. I'm pleased to offer this week's wealth factor refocus, where we cut through the noise and focus on the long term. Last week we looked at the dynamics of yearly returns an entry here declines. This week, we will zoom out as we look at value and growth left to our own decision making we will naturally gravitate to what did well yesterday. This hasn't always led to strong results. I call this return chasing the graph on the left here is an analysis that represents the relative valuations of value versus growth. This graph suggests that value stocks were cheap relative to growth starting in 2000, but expensive relative to growth starting in 2008. It also So shows that today value is less expensive relative to growth, but not at the extreme levels that we're seeing as the tech bubble was bursting. With the benefit of hindsight, we know that you wanted to be invested in the cheaper relative values, or the factors that hadn't performed well. Previously, value stocks in 2000 in gross stock since 2008. Like all things, I wouldn't suggest this to have predictive power. But at a minimum, it is a reminder that we should not chase What did well, yesterday last week, we looked at the media's inability to add perspective and how they often fail to inform us of key biases of their Wall Street speakers. This week, I want to focus on how our minds work. When we consume media, we tend to gravitate toward media, that we are predisposed to believing or that reinforces what we already think is going to happen. A current example there are plenty of people that believe in media to support the idea that the market will decline materially going forward because of the Coronavirus impacts. To the economy. As always, while this may be true, it is equally likely that the opposite will occur. April's strong upward move in prices was a perfect example of this to be successful as an investor. You need to tune out this noise and acknowledge that no one knows what will happen in the short term.


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