Sic transit gloria mundi. Thus passes the glory of the world. It's half of all the Latin I know. Over the centuries it's been used in Papal coronations, snarky Valentines from Emily Dickinson and at least two Hollywood classics, Patton and Rushmore.
Today it applies to the Nasdaq (^IXIC) which may have officially spent Monday night over the haunted 5000 level but didn't trade in that rarefied air for even an instant yesterday, opening down ten and falling as much as a percent before recovering a bit into the close. After taking 15 sometimes excruciating years getting back to 5000 the forever dot-com-bubble-tainted index has spent less than one full trading hour at that lofty perch, at least so far.
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If you include the Nasdaq in the financial crisis mix you could argue it cost the government between $14 and $20 trillion getting our stock markets to record highs for that shining moment on Monday. Not since the Brits spent 30 years and at least 1tenhuman lives getting Tenzig Norgay and Sir Edmund Hillary to the top of Everest for 15 minutes has so much effort been put into such an oddly ceremonial accomplishment. Yesterday Nepal threatened to limit access to the mountain unless something was done about the overflowing trash and human excrement coating the slopes. Hopefully a more glorious fate awaits U.S. investors.
There's evidence suggesting otherwise. The Fed's most recent survey of consumer finances showed that the average American family headed by a 55-64 year old person had $104,000 saved for retirement. A perfectly average American retires at 63 and dies 19.1 years later. That leaves about $5,000 a year in nest egg to draw from in your golden years. You'd be more comfortable living in a filth strewn Everest base camp than anywhere in America on five-grand a year.
According to Vanguard, which obviously has an interest in promoting index funds, actively managed funds have average all-in costs of about 2.27% a year. Assuming, generously, that the market returns 7% a year over the course of your life and your stock picking / mutual fund strategy keeps up with the market, the fees alone will reduce your retirement account by more than 65% over a working life of 40 years.
It's human nature to imbue great meaning into the utterances of the wealthy. When it comes to retirement the problem is,making Gods of stock pickers contributes greatly to those horrifying nest egg shortfall figures I just ran through. You see, investing isn't glamorous. It's not a seat-of-your-pants thrill-ride. It's a grind. Control losses, mind your risk levels and don't freak out when the market hiccups. If you want to take any advice from a stock guru on financial TV why not trust Warren Buffett who just this week reminded investors yet again that they would be well-served to completely ignore stock advice from guys like himself.
So my last two messages from this platform are these: First, if you want to be a good investor it starts by keeping score. If you can't beat the market, including fees, investing yourself for a reasonable period of time, (call it five years) then just buy an index fund and keep enough cash on hand to add to it aggressively any time the overall market falls 10% or more.
That's it. The rest of this stuff is showbiz, noise and distraction. There's information buried in financial media but you gotta work to find it and I'm not always going to be here to help.
My last piece of investing advice is the only other Latin I know: Caveat Emptor when it comes to absolutely everything related to Wall Street. Look out for yourself. No one else is going to do it. Financial media's job is to help you come up with ideas. Your job is to build your nest egg to above average levels before you retire. Never forget that the burden for doing that is entirely on you.
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