Tag Archives: Mark Matson

Should You Chase The S&P 500?

The stock market can be a complicated place,  filled with unfamiliar terms and investments. One you’ll come across often is the S&P 500. To explain briefly, the Standard & Poor’s company, now known as S&P Dow Jones (majority owned by McGraw Hill Financial), created its first stock index in 1923.  The S&P 500 stock index in its present form was created in 1957 to track the performance of 500 large companies that have common stock listed on the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ). The 500 stocks comprising the index and their index weightings are determined by S&P Dow Jones. The S&P 500 is used as a measure of the general level of stock prices and includes both value and growth stocks.

The S&P 500 had a hard time during the great recession. However, on May 3, 2013, it closed above 1,600 for the first time in 13 years. Since then, it set a record intraday high value of 2,134.72 on May 20, 2015 and a record closing value the next day of 2,130.82. Of course, markets are uncertain, advisers can have different strategies and advice and past performance does not guarantee future results. That said, is the S&P 500 something you should be focused on?

Mark Matson answered that question when he appeared on CNBC recently. He explained that chasing the S&P 500 may not be the best idea. Investors are chasing it because it was one of the best performing asset categories. However, Matson Money wants to remind investors global diversification is important, because only 49% of the world’s capitalization is in the United States, so there’s more opportunity globally than domestically.

Everyone seems to be running away from emerging markets around the world because they’ve been down. However, buying things when they are down creates opportunities for your portfolio. Being a long-term investor often involves  forcing yourself to do  things that others are not willing to do. Waiting for positive market news could damage your portfolio. Rebalancing your portfolio and investing when the market is down creates the potential for gains without trying to rely on market timing and stock picking when no one really knows when the market will move.

Wealth Transfers

‘After The Bell’ airing on Fox Business hosted Mark Matson to discuss wealth transfers during a time of uncertainty in the stock market. When’s the best time to buy? Is there a specific time to get into the market? Those questions can’t be clearly answered by anyone about the market because it is generally unpredictable, but there are ways to hold steady. Any time you are in the stock market, you want to look at equities in the long-term and be consistent: you want to focus on something for the next 20 years and not the next 20 minutes. It’s best to ignore short term volatility because they can generally see lower returns and aren’t worth the investment according to Matson’s philosophy.

Every time the market crashes, investors should be thinking, “Opportunity! Opportunity! Opportunity!” Because buying now when everyone is panicking can turn into a long-term wealth transfer if you hold out long enough. Say for instance the market does fall. Matson wants his investors to focus on the market as a whole and have a well balanced portfolio with their picks being situated for the long haul. However, avoid long bonds because they are risky in terms of interest rates and have the potential of harming your bond portfolio. When everyone in the market panicked in 2009, that could have been the opportunity for wealth transfers.

It’s all about keeping your investors from panicking and looking at the market with a long-term plan and strategy so they can have the potential of making great returns. Shying away from trending and popular stocks is another investment strategy to follow because being popular in the short term doesn’t necessarily mean it’s going to be the most fruitful picking in the market. Sticking to longer picks diversifies portfolios and helps give you more of a balanced offering.