Читать книгу Cocktail Investing - Hawkins Lenore Elle - Страница 9

Consider that if you put away $250 per month over a period of 30 years in a savings account, you will probably end up with something around $145,000. If you could only sock that much away each month for a period of 20 years, you would have more like $82,000. As you can imagine, if you only had 10 years of saving like that, you would have even far less.

How would you feel upon realizing that you didn't prepare sufficiently – and by that we mean save and invest properly and you had to alter your lifestyle when you finally retire? Think that's far-fetched? A survey conducted by The American Association of Retired People (AARP) found that 60 percent of New Yorkers over the age of 50 said they were likely to go somewhere else in retirement. The same survey found 40 percent worried about paying rent or mortgages, 56 percent were extremely or very worried about paying property taxes, 51 percent worried about utility bills and most were looking for improvements in healthcare, housing, transportation, and jobs for older residents.

The bottom line is you need to grow your savings in order to meet the money needs you will have. In our view, one of the best if not the best way to achieve this is through investing in the stock market, but we need to warn you that the rules of investing have changed.

Although 2013 was a banner year for the stock market with the S&P 500 up more than 32 percent and 2014 saw the index rise another 11.4 percent, a longer view shows that the 15-year total return as of October 31, 2015, for the S&P 500 was less than 3 percent (see Figure 1.2).

Figure 1.2 S&P 500 trailing total returns as of October 31, 2015

Source: Morningstar

Whether you are a mutual fund manager, hedge fund fat cat, or Wall Street trader, buy-and-sleep investing is over. As we have said many a time, whether it is when giving presentations at the MoneyShow, or speaking to groups at various American Association of Individual Investor chapters or at other conferences, gone are the days when you could buy a stock, an exchange-traded fund (ETF), or mutual fund and, much like crockpot cooking, forget about it until you are ready.

You don't have to be an aggressive trader – frankly, few can do that successfully for any sustained period of time – but, rather, you must be a proactive investor, and that means regularly updating your investment thesis, knowing how to weed through the heaps and heaps of information out there, and when necessary, jettisoning a position that is no longer viable. That in turn means knowing where and when to reinvest.

Given today's fast-paced world of tweets, texts, and barely-scratching-the-surface news reporting inside an ever-increasing deluge of information, the average individual investor faces the ever-growing challenge of having to cut through the clutter and decipher what it means…to understand how, where, and why they should be investing given the current environment and what lies ahead.

That means being able to read the economy like a professional investor, filtering out all the useless and misleading data, recognizing the investable signals, and identifying which company or companies stand to benefit. It also means identifying both cyclical and structural changes – like the Internet, mobility, social media, and other forces that have drastically altered business models. Think about Blockbuster Video, any record label, Borders bookstores, Circuit City, or Palm computing. They all faced a shift in their industries that they were not prepared for and where did it leave them, a footnote in business history. Psychographics (the how, where, and on what both people and companies are spending) and demographic trends (the evolving political landscape and significant regulatory implications) need to be understood in order to grow and protect your life's savings. This may sound overwhelming, but there is a way to stay focused on just those things that truly matter.

We mentioned several pain points earlier that have arisen from our living longer lives, but there are others such as the growing water crisis, the explosion in the depth and frequency of cyberattacks, severe swings in key input costs and commodities such as corn, wheat, coffee, beef, and other parts of the protein complex, and that's just getting started. As you'll see in Chapter 7, we love pain-point investing because it creates a situation that screams for a solution. An investor who is able to identify a company situated to fill that need can profit bigtime.

While any one of these factors can lead to a good investment, the intersection of these factors leads to waves of changes that companies must contend with – some will capitalize on them while others will be left behind.

The essence of Cocktail Investing recognizes the intersection of several powerful forces – economics, demographics, psychographics, technology, policy, and more – that, when combined, give way to a powerful force that shifts the what, where and how people and businesses are going about their daily activities. At the very core of these uber-catalysts, companies, be they business-to-business (B2B) or business-to-consumer (B2C), need to respond to the changing landscape and adapt their business models. If they don't, odds are they will shift from a once-thriving business to one that is struggling and likely to be left behind and replaced by others. Think of the transformation and rise in the share price at Apple post iPod, iTunes (its payment processing content engine), iPhone, and iPad compared to the fall of BlackBerry and its shares after the iPhone. One could argue these waves of transformation are affecting how and where future generations will be educated.

As we'll talk about in the coming pages, buy-and-sleep investing in the stock market won't help you, either. You need to have at least some of your assets in growth and that's true even after you retire.

No matter how you look at it, not only do you have to save but you have to be an active investor to get the most from your money and get the life you want, be it debt free or kicking back in the lifestyle you want in your golden years. In many ways, what we're saying is rather similar to what hockey legend Wayne Gretzky has said is one of the secrets of his success – knowing that he needed to be where the puck was going…he had to get ahead of it and all the other players that were simply following it. The same holds true for investors.

Inherent in that statement, which we suspect you subscribe to, is being able to decipher from all the noise that is out there and putting the pieces of the puzzle together to identify the companies that are best positioned for what lies ahead, while sidestepping the pretenders and those that will be left behind.

If you are an experienced investor, you may be formulating a plan of attack using the pain points we've identified in this chapter as a way of screening potential stock positions. There is no doubt the aging of the population gives rise to opportunities for healthcare companies, end-of-life-care companies, asset managers, and online investing platforms, as well as others. As you'll see, we'll be sharing techniques and procedures to help you identify the better positioned companies and how to determine which may be better for you – shares in a 9 percent dividend paying company or one whose shares are trading at a 30 percent discount to its price to earnings growth ratio?