Statistics | Wisdom, Wealth, and Wellness

Jonathan Satovsky
CFP®, ChFC®, CIMA®, CPWA®, CDFA®, DACFP

Good morning, good afternoon, good evening. Depending on the part of the world you’re in. This is Jonathan Satovsky of Satovsky Asset Management. And on today’s episode of “Seeking Wisdom, Wealth, and Wellness,” I want to talk about statistics.

It’s a really fun topic for me. But, why do I want to talk about statistics? Because people throw around numbers all the time. “Oh, wow, you got a 30% return!” “I lost 30%.” “I made 30%.” Well, you know, statistics can be misleading.

To give you a couple of examples, if the markets dropped 30% and then gained 30%, many people might think you’d be back to even. Not the case. You’d have $0.91 on your dollar. How about if you make 30% and then lose 30%, where would you be? Same ninety-one cents.

You see, the loss has a disproportionate impact on the gain when you calculate numbers. Why? Because if you go down to $0.70 and you make 30%, you make back $21 out of $100. If you make $130 and you lose 30%, you lose $39 and you’re back down to $91.

Okay, so that’s one thing. The second thing is people want to talk about past performance. “Oh, my God. Growth versus value.” “Growth is doing great and value is doing terrible so let’s put more into growth.” Well, let me give you a little perspective. This is kind of interesting. The average PE ratio for large growth stocks since 2000 to 2022 is 23.8. Currently, as of May 2023, large growth companies are trading at 28.73, which is five percentage points higher than history. And small values at 9.52 versus history at 15.1, almost five and a half below.

So, past performance, is that an indication of the future results? Be aware of the statistics you’re looking at on your path to Wisdom, Wealth, and Wellness.

Have a great day.

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Video Recorded June 5, 2023
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Disclosures

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 index information was compiled from sources that SAM believes to be reliable. No representation of guarantee is made hereby with respect of the accuracy or completeness or such data. 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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