BUZ LIVINGSTON: As the markets turn

Buz Livingston

There are two types of people in the investing world: Those who don't know where the market is going and those who don't know they don't know where the market is going. Gurus predicting the direction of equity and bond markets make voodoo doctors look good.

According to data provided by Lipper and J.P. Morgan Asset Management, from December 1993 through December 2013, the S&P 500 had two steep corrections of 49 percent and 57 percent. However, investors who held through those roughly 5,000 trading days earned more than a 480 percent return. However, if you missed the 10 best days over that 5000-day trading period, returns fell to "just" 191 percent. Missing the best 30 days cut returns to less than 20 percent, lower than 1 percent, annualized. Missing the 10 best days of the S&P 500 sliced returns by over 50 percent. Think about these numbers the next time the notion of selling everything hits you.

No one knows how markets will perform, but one thing is certain: Investors routinely underperform. Don’t be that guy. It is also important to understand the S&P 500 does not represent the entire investing arena, compromising less than 40 percent of the total world market.

In 2000, no one thought bonds would outperform stocks for the first decade and a half of the new century, but they did. In last week’s Wall Street Journal, Allan Roth pointed out from Jan. 1, 2000, through last December, Vanguard’s Total Market Bond Fund beat Vanguard Total Market Stock Fund, assuming total returns.

Yes, not everyone has a 20-year window. Near-term spending goals should not be invested in stocks. Even if future returns are less than those over the last 20 years, don't bet against the United States’ economy. Make sure your portfolio is appropriate for your goals, time horizon and risk tolerance. Use realistic returns, basing your retirement on eight percent gains, as the South Walton Fire District pension plan uses, is like walking through hell in a gasoline suit.

Stealing the Beach

If you missed the last Walton County Board of County Commissioners meeting, there was an item concerning attempts to privatize, shut down or limit public access to Walton County beaches. By coincidence, the meeting was held in DeFuniak Springs, a 30- to 45-minute drive from South Walton. Regardless of any decisions reached during the meeting, do not think this issue will abate soon. As tourism numbers continue to rise, beaches get increasingly crowded, and tensions escalate. I have zero patience for anyone wanting to restrict beach right of entry, and I am a beachfront owner. There is a 10-week window when tourists swarm, the rest of time it is bearable, sort of. No one held a gun to your head and made you buy a home in a tourist market. The Walton County BCC should immediately enact an ordinance granting the public customary use of the beach; problem solved. Allowing beachfront owners to limit beach use will negatively affect vacation rentals and real estate values.

Even though Buz Livingston is a fee-only certified financial planner this should not be considered personal advice. For specific recommendations visit online at or at the office in Redfish Village, 2050 Scenic 30A, M-1 Unit 230. Follow us on Twitter @BuzLivingston.