Check Out the First Episode of
Offit on the Street
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We hope you enjoy watching this fun video as much as we enjoyed making it!
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A New US Citizen, Walking for a Good Cause, and More
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Here's a little insider view; A Microsoft Teams chat at Offit Advisors summarizing what was a very active weekend for the company.
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Congratulations to Offit Advisors' very own Laura Sendldorfer, who recently became a citizen of the United States, after immigrating 11 years ago from Germany. Laura has grown tremendously professionally and personally from not knowing English when she first arrived in the US as an Au Pair to now being an amazing Financial Advisor, who various Securities and Insurance licenses and being a Charted Financial Consultant (ChFC®) !
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The Offit Advisors team proudly joined the Run Hope Work 5K in support of a great charity, and our late client Jose Ortiz.
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Ben and his family, and Laura and her husband Steven joined the 5k in Washington DC, while Zach Weisenthal ran virtually in Gaithersburg and Barbara Owens walked virtually on the beach Myrtle Beach.
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Ben Closes Out October in Halloween Style
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In the picture above, Ben got in the spirit of the season, dressing up as Kendall Roy from HBO’s Succession for Halloween.
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Staying Sane in the Wild World of Finance: Don't Chase Investment Fads, Focus on What Works
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Hey there, lovely readers!
Today, we're diving headfirst into the lovely world of investment fads!
So, imagine you are at a neighbors BBQ in Maple Lawn, while you overhear a neighbor starting to brag about how much money they have made in XYZ investment. Sound familiar? Well, let’s talk about how some of those work and ones to be aware of.
Fad 1: Chasing Past Performance in Funds
There is something within investing called the Behavior Gap. And what they find each year is that the ‘regular investor’ underperforms the market by about half of what it does. This is because most people chase what seems to be hot at the moment, and they shy away from what seems to be underperforming
at the moment.
This can be seen in funds where investors chase the past performance of what it did previously, but that doesn’t necessarily forecast what it will do in the future. A similar example could be investors chasing things ‘hot funds’ like Cryptocurrency, NFTs, Cannabis stocks, AI stocks, Vaccine stocks, etc. It seems logical to invest in something that seems to have so much relevance and importance in the moment, but that is not necessarily a predictor of what it will do in the future.
Fad 2: Chasing Short-Term Interest Rates
With interest rates being higher, people are saying to themselves why should I invest or “take risk” in the stock market when I get “Treasury bills and chill” and earn 5.6%?
These are the highest yields we have seen since 2001, and while they may feel comfortable and cozy in the short term, in the long term it can end up costing you a lot of money.
If you look back at January 2001, when we also had higher interest rates and yields, and then look out over the next 20-year period – cash did 31%, treasury bonds did 163%, and the S&P 500 did 318%.
So ultimately, just like it felt good in January 2001 to get Treasury Bills or CDs, or it may feel good now, in the long term you may be costing yourself money.
These yields aren’t permanent, but staying invested and capturing long-term returns are.
Fad 3: Chasing the Top Tech Companies
People are also focusing on that most of the returns are being driven in 2023 by the ‘Magnificent 7’ the top 7 (tech stocks) in the S&P 500 (Apple, Meta, Tesla, Nvidia, Amazon, Alphabet, Microsoft). The fact is that while these companies are doing great right now and are “hot”, the top companies change all of the
time. If you look back to previous decades, the top companies were things like General Electric, IBM, Exxon, etc and these were before things like the top companies today were even conceived of.
This type of thing happens all of the time.
So if chasing performance and fads is a mistake, what should most investors do?
Not a Fad: Focus on the Fundamentals
Focus on the following instead:
1) Asset Allocation – your ratio of stocks to bonds and what makes sense for your long-term financial plan
2) Be Diversified – having all of the asset classes in your portfolio
3) Low-cost – be invested in a low-cost way with index funds
4) Tax-Efficient – Invest in Funds that don’t have a lot of turnover, capital gains, etc.
5) Manage Behavior – stay invested for a decade or more, despite the ups and downs along the way
All of this will help you get out of the “in-and-out” philosophy. Instead of focusing on who did best recently, focus on the ingredients that lead to success. Don’t chase the hot short-term fads, focus on what works in the long term.
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An Important Message About Mental Health & Suicide Prevention
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The holidays can be particularly difficult for people struggling with mental health. Please take a few moments to watch this powerful video about mental health, and Be sure to check in on your loved ones.
If you or someone you know is struggling, click the link below to get quick access to help by calling the 988 Suicide and Crisis Lifeline.
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S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index.
Dow Jones Industrial Average - The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy.
NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes approximately 5,000 stocks, more than most other stock market indices. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indices.
Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index which includes the 3,000 largest companies in the U.S., based on market capitalization. As of the latest reconstitution, the average market capitalization was approximately $762.8 million; the median market capitalization was approximately $613.5 million. The largest company in the index had an approximate market capitalization of $2.0 billion and a smallest of 218.4 million.
Russell 1000® Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
Government bonds are guaranteed by the U. S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value.
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Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Offit Advisors is not affiliated with Kestra IS or Kestra AS. Offit Advisory Services, LLC is a tax firm but neither Kestra IS nor Kestra AS provide legal or tax advice and are not Certified Public Accounting firms.For more information on the Five Star Wealth Manager and the research/selection methodology go to: www.fivestarprofessional.com. Investor Disclosures: https://bit.ly/KF-Disclosures
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