Sunday, April 2, 2023
HomecommentaryMichael Farr: Enjoy this bull market, but investors shouldn’t get complacent

Michael Farr: Enjoy this bull market, but investors shouldn’t get complacent

Bull markets are wonderful.

Investors get richer. Mistakes get glossed over. Corporate America expands, and folks feel smarter. This one could last a lot longer, but it will, without question, end someday. When bull markets last for a number of years, it feels normal to make money. Stock investors smile more, look a little smug at times and believe that they're pretty smart.

Peter Keefe at Avenir Corporation told me years ago that there are only two types of investors: those who have been humbled and those who are about to be. The longer the period between humblings, the more painful the next hat-eating can be.

Unemployment numbers remain high in spite of 8.1 million unfilled job openings. Part of the cohort not applying for those jobs are my fellow baby boomers who are deciding that they have enough and will retire.

I'm worried about these folks because they are making decisions based on portfolios valued at all-time highs. This is one among many insidious traps of record high valuations.

Have you looked at your recent brokerage statements? Pretty good, huh? What pandemic? Whenever you look at your statement, pay attention to the "unrealized gains" number. Subtract about a third of that figure to determine the after-tax, real money value of your account.


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