Lehman, the Lottery, and the Long View

Jonathan Satovsky

Jonathan M Satovsky discusses markets 10 years after the Lehman Brothers collapse, describes how consumers’ lottery habits hurt them, and explains his emphasis on the long view when setting investing goals.

Good afternoon. This is Jonathan Satovsky of Satovsky Asset Management. September 2018 with a video blog update.

And today we want to talk about 3 things.

Lessons on Lehman, lottery tickets, and the long view.

So let’s start with Lehman brothers because 10 years ago, in September of 2008, we experienced a major financial crisis and financial markets around the world had declined significantly.

And sort of deterred people from believing in capitalism and developing good long term habits of saving and investing and taking a disciplined approach to investing.

But if you look at it, the financial markets referenced by the S&P 500 declined 55% in from January of 2008 through February of 2009.

And now if you fell asleep like Rip Van Winkle for the 10 years, you’d be up 150%.

So what it has caused people is more of a lottery impact.

In fact the behavior of the consumer population, 3 out of 10 low income families played the lottery every week.

They spend $412 dollars annually on the lottery representing over $80 billion a year in lottery tickets.

So people are trying to get rich quick.

But you know just to give you a little perspective, you know last year’s darling in Bitcoin is down 60% this year.

So be careful about getting too enamored with anything, even the S&P 500.

If you take the long view, the last decade even see that the US market has vastly outperformed all the markets around the world, the foreign markets and emerging markets.

So I was with a friend last week and he told me, John, I just want to make the most money. That’s how I’d be happy.

I said, the most money, that’s interesting.

So what does that mean?

Is that in a day, in a week, in a year, in 5 years, in 10 years?

You know, how do you measure that success?

So to sort of expand upon the lesson, I’m gonna show a little example of the Nasdaq emerging markets and a globally diversified 60% value oriented stock portfolio and 40% bonds over the last 10 years.

And you could see that as a byproduct of the growth of Nasdaq related companies, Amazon and Apple crossing the trillion dollar mark which in fact in 1982, the trillion dollars was the entire market capitalization of the entire US market.

So it’s sort of a fascinating change over the last 10 years that these several companies had such a dramatic outsize impact.

But now let’s zoom back 20 years and go from January of 1999 and look at the same 3 Nasdaq emerging markets and the globally diversified 60-40 portfolio.

And you see a different story. Emerging markets would have been the best place to sit.

So understanding someone’s risk profile and someone’s temperament is probably 90% of people’s success because you need to find a path that you understand and you can be discipline enough so you can capture the returns of the investments that you have over a lifetime.

So with that have a wonderful rest of your September and we’ll speak again next month.


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Video Recorded September 28th, 2018

This blog post is not intended to be, nor should it be construed or used as, an offer to sell, or a solicitation or offer to buy any securities or interests in any strategy offered by Satovsky Asset Management, LLC (“SAM”). SAM is a registered investment advisor with the Securities and Exchange Commission – for more information see www.adviserinfo.sec.gov. Please remember that different types of investments involve varying degrees of risk, and that past performance is not indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the strategies recommended or undertaken by SAM) will be profitable. Market index information shown herein is included to show relative market performance for the periods indicated and not as standards of comparison. The market volatility, liquidity and other characteristics of SAM’s portfolio composition are materially different from the securities listed on public market indices. Market indata. Opinions are as of date of video and are subject to change. A copy of SAM’s current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request. SAM undertakes no duty to update information presented herein.

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