By Karlan Tucker
What we learn from history is that people don’t learn from history.” – Warren Buffet
From 2007 – 2009 the market declined in a significant recession and the stock market fell by an alarming 50%. Everywhere you turned people were losing money and our nation was greatly impacted by these losses.
On March 6, 2009 the Dow Jones Industrial Average (DJIA) hit 6,443 as its low, dropping 54% from its high on October 9, 2007.
During this economic crisis, people resolved to never repeat their mistakes by waiting to recover their losses and then pulling out of the stock market. Today the market has recovered and is at the highest level it’s ever been, but have people forgotten what they learned from the last economic crash? Karlan Tucker reviews client’s financial investments and market trends, and many Americans have done nothing to prevent a repeat of up to 50% losses in their portfolios. Warren Buffet may have said it best, “What we learn from history is that we don’t learn from history.”
Karlan Tucker Reviews the Stock Market
“If you can’t measure it, you can’t manage it.”
Unfortunately, people don’t do the math and think the returns are higher than they actually are. For example, people often say, “I’m doing great, my 401 (k) grew by 12% last year!” What they fail to account for is their personal contributions to the 401 (k) as well as those from their employer. Those contributions are what grew the account value and often are responsible for about half or two-thirds of the account gains. It likely wasn’t from the performance of the stock market alone. However, as Karlan Tucker reviews client’s 401 (k) performance, many people mistakenly attribute the growth of their 401(k) solely to the stock market.
“If you think education is expensive, try ignorance.” – Derek Bok, Past President of Harvard University
It may sound impressive that the stock market grew from 11,497 points to 18,000 points from the years 2000 to 2016. However, that means that in nearly 16 years the Dow Jones only grew by 3.8 percent annually. You put up the capital, take the risk, and only get 3.8 percent gain! Karlan Tucker reviews market trends and part of what has driven the market high is government policy. The Federal government lowered interest rates to unprecedented low levels in order to drive people out of banks and other more secure places, and to encourage them to risk investing in the stock market. Now when they reverse themselves and raise interest rates there’s a real threat it will crash the market if they rise too much too fast.
Karlan Tucker, is Founder and CEO, Financial Fiduciary of Tucker College Solutions. He’s a 5-star wealth manager and financial fiduciary, Karlan has been helping families retire comfortably for over 30 years. Himself a parent trying to save for retirement, while paying for 3 children to go to college, Karlan recognizes that families need personalized help to navigate these challenges. Tucker College Solutions delivers this personalized help, serving hundreds of Colorado families with customized college planning and comprehensive retirement income planning. Karlan’s leadership and love of learning provides innovation to Tucker College Solutions that is keeping our clients in control of their future.