5 Market Lessons I Learned in a Year

Good advice, from broader outlooks to specific strategies

   
5 Market Lessons I Learned in a Year

Wow. That went fast.

I’m celebrating my one-year anniversary at the desk at InvestorPlace, and the stock market is in a much different place than it was back then. Since last year …

  • The Dow Jones Industrial Average has gained more than 11% and is touching record highs daily.
  • The S&P 500 has gained more than 14% and is working toward its October 2007 high.
  • The Nasdaq is the laggard, but still ahead over 9%;
  • Facebook (NASDAQ:FB) went public in disastrous fashion, then lost roughly half its value before starting to claw its way out of the hole.
  • Apple (NASDAQ:AAPL) soared nearly 30% to above the $700 mark before plunging 40% to its current price around $430. Total loss since then: 20%.
  • The Mayans were totally wrong.

And despite all that noise, I still managed to learn a few things along the way:

  1. You Have to Pay to Play: An exclamation of “Just buy a @#%!ing stock” during a meeting soon became a running joke in the office … but the advice (and aggressive sentiment) is important. Sometimes the market will go up and make you jump for joy, and other days it’ll fall and make you want to throw a chair out the window. But in the long-term, stocks outperform most other assets and certainly are better than just sitting on cash, so there’s no time like the present to get started. (For this past one-year cycle, at least, you’d have been happy you did.
  2. Explore Names You Just Don’t Know: Did I know about dividend gold-mine W.W. Grainger (NYSE:GWW) last year? Heck no. What about Cummins (NYSE:CMI)? Again, no way. In fact I could write a column — or 50 — out of the great companies I just didn’t know about because they’re not big in-your-face consumer brands. While investing in what you know is a tried-and-true method that even Warren Buffett gets behind, sometimes profits can come from investing in what you didn’t know … that is, what you didn’t know until you did your homework.
  3. ETFs, ETFs, ETFs: I knew what they were before, but I never paid much attention to them as an investment. Silly me. Exchange-traded funds are an outstanding way to reduce portfolio risk; you can invest in companies you like without necessarily having to make an outsized bet a single name. And, because they’re chopped down into just about every combination you could want — by sector, industry, asset class — ETFs are a great way to make directional bets. So, now I know.
  4. People Genuinely Care About Retirement Issues: Planning for retirement is daunting, I don’t care how old or young you are. For those just starting out, it’s hard to imagine how long and difficult the road ahead is going to be. For those getting closer to that fateful day, each and every decision feels magnified, and it’s difficult not to panic. Getting the opportunity to provide some guidance has been cathartic on some levels — it’s nice to know other people are in the same boat.
  5. Thank Goodness for Second Careers: Too many people want to dream about retiring to a life of leisure. Nonsense. What you don’t want to have happen is a second career of boredom and inactivity. Easier said than done, sure, but trying to find something rewarding and interesting that comes with a paycheck — either for or as part of a retirement plan — is as good as it gets. Make the most of your own personal skills and assets and see what’s out there.

All right. Time for year two. I’ll get back to you again in another year.

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he was long AAPL. 


Article printed from InvestorPlace Media, http://investorplace.com/2013/03/5-lessons-learned-one-year-later-aapl-cmi-dg-ll-fb/.

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