Tag Archives: Mark Matson

Moving Past the Recession

When investors  talk about the Recession of 2007-2009, some actually quiver. Although things have improved since then, nearly everyone took a hit. On top of that, some people are still suspicious of the role of the federal government in the market:  they think the government might be influencing interest rates. The dual impact of the recession and investor suspicion has led many investors to be too conservative with their investments as the market strengthens. In addition, investor reticence to hold onto equities as long as they used to is affecting investors’ chances of reaching their portfolios’ potential.

Investors should understand that the current market is very different from 2008. In addition, interest rates are primarily affected by supply and demand – not the federal government. Essentially, investors need to clear their heads and reevaluate how they approach the market.

According to Mark Matson, who recently appeared on the Fox Business Channel, investing gingerly and acting as though another recession is just around the corner could be very limiting. Mark discussed the basics of market supply and demand and explained a simple economic concept: if people aren’t buying a product or service, the demand is low and the price stays down; if a product or service is in high demand, the price will rise. The forces of supply and demand allow sellers to price more competitively. A common example of this principle can be seen in the price of oil, although there are a number of other factors that help to determine the price.

At any rate, the principle of supply and demand applies to the stock market as well. This causes problems for day traders who constantly have to worry about market ups and downs, as well as the timing of buys and sells. In short, this strategy is too risky for many investors.

Mark Matson and the advisers who follow his philosophy  are committed to owning and holding equities for the long term. Of course, it’s worth noting that not all strategies are the same, nor does past performance guarantee future results. Nonetheless, advisers who follow the Matson Money strategy coach their clients to hold onto their equities, because what’s hot today could be cold tomorrow. Additionally, they stress the importance of a diversified portfolio that has the potential to survive market gyrations even.

At the end of the day, investors should understand that supply and demand are the primary market movers. There is no reason  for investors to remain so conservative if their equity investments are well-diversified.


Will Financial Troubles In Greece Ruin Your Portfolio?

Do the financial problems of Greece make you wonder whether the gods and goddesses of Greek mythology would have thrown up their hands in frustration? While some might say yes and others might not, either way, Greece’s financial misfortunes have a lot of people talking. Mark Matson wants clients to understand that the news surrounding Greece’s current financial crisis isn’t as bad as it seems.

For years, Greece has had difficulty paying back borrowed money, including two separate bailouts received in 2010 and 2012 that roughly equate to over $240 billion USD. The bailout dollars represent billions of dollars owed to banks, private investors and a number of European countries like Germany, France, Italy and Spain.

Right now, Greece and its lenders are hashing out a third potential bailout that must be settled by Aug. 20 absent a second bridge loan. According to Reuters, this bailout, expected to be worth up to 86 billion euros ($94.5 billion), is likely to happen, but there is still work to be done. The question is whether Greece will be capable of paying back these billions of dollars. If Greece defaults or declares bankruptcy, creditors would lose their investments. Some fear that bankruptcy or default will cause a ripple effect that could damage other economies, including the United States.

Responding to The Concerns

Mark Matson gave his thoughts on these concerns during a recent segment of Matson Money Live! where he and his team broke down the logistics of the issue. They noted that investors should first understand that things seen on televised news shows or read in newspapers about the issue are often sensationalized to make it seem worse than it really is. Michelle Matson put it in perspective by saying one country, particularly a relatively small country like Greece, is unlikely to have the largest impact on the global economy.

In addition, even if the situation turns into a bankruptcy or default, investors need to understand that this would not necessarily mean that repayment will not happen. Historically, these events have happened before and have resulted in a number of different outcomes, including debt restructure plans, modified repayment arrangements and other solutions. Investors should also understand that government defaults and bankruptcies can happen anywhere around the globe. Take for instance the 2014 restructuring plan in the city of Detroit, Michigan after they declared bankruptcy. It can happen anywhere, but it doesn’t necessarily impact the global economy.

The credit default risk associated with emerging markets and municipalities is one reason why Matson Money does not invest in municipal or emerging markets bonds. Avoiding these investments decreases credit default risk for your portfolio, but is not a guarantee of portfolio performance.

Investor Questions: Have You Asked These Before?

If you’re an investor, there have probably been times when you’ve asked yourself a few tough questions. Some might include why am I underperforming the market? Why am I underperforming the benchmarks? Why am I in international stocks? And why do I need an adviser? When it comes to investing, these might just be a few of the things that you’ve contemplated because the answers to these questions are not always clear.

However, Zack Shepard of Matson Money shares some insight on a few of these troubling questions. As you read through the questions and answers, please note that they are suggestions from the Matson Money team and do not guarantee future results. Other advisers and investors may offer different recommendations.

1. Why Am I Underperforming the Market?

One simple answer may be that you are not invested in a well-diversified portfolio and have not held it for the long term. Mark Matson and the advisers who follow his investment advice often recommend a long-term, well-diversified portfolio to their clients, in part because investors who chase hot stocks or attempt to time the market have historically underperformed the market according to studies conducted by Dalbar, Inc., e.g. over the last thirty years, the S&P 500 Index has an annualized return of 11.06% vs. the average equity investor at 3.79%. In its 2015 Quantitative Analysis of Investor Behavior, Dalbar defines “Average Investor” as “The universe of all mutual fund investors whose actions and financial results are restated to represent a single investor. This approach allows the entire universe of mutual fund investors to be used as the statistical sample, ensuring ultimate reliability.” p. 29. “Average equity and average fixed income investor”, as used in the same study, is that subset investing only in equity or fixed income mutual funds. See p. 33 at n. 4. Dalbar’s average investor equity and fixed income fund returns are set forth in a table on p.5.

2. Why Am I Underperforming the ‘Benchmarks’?

The generic market indexes used as performance benchmarks are not engineered to reflect the three-factor model followed by Matson Money. The focus of Matson Money when it comes to structuring institutional equity mutual funds consists of mixing small cap and high book-to-market (value) companies with a small percentage of the S&P large cap companies, which does reflect the three-factor model recommended by leading financial academicians.

3. Why Am I In International Stocks?

Over the long term, investment in international stocks has historically provided the opportunity for better returns than the returns available to domestic only portfolios. According to historical index data, while the domestic large cap equity market as evidenced by the S&P 500 index periodically outperforms international markets at specific points in time, over longer periods of time, international stock indexes have often outperformed the S&P Index.  While past performance is no guarantee of future results, take a look at the following data as an example:

                                                                 2014 Return         2000 – 2014 Return

S&P 500 Index                                   13.69%                                  4.24%

MSCI EAFE Value Index                 -4.92%                                  4.35%

MSCI EAFE Small Cap Index         -4.92%                                  7.57%

MSCI Emerging Market Index     -1.82%                                  7.38%

We should also note that the indexes referenced above are unmanaged, cannot be invested in directly and their returns do not reflect any management fees, transaction costs or expenses. This graph does not reflect actual investor results and no representation is made that your portfolio would experience similar results. The S&P 500 Index is an unmanaged, market-weighted stock index based on the market capitalizations of 500 leading companies publicly traded in the U.S. stock market, as determined by S&P Dow Jones. The various Morgan Stanley Capital International (MSCI) Europe, Australasia, Far East (EAFE) Indexes are various versions of unmanaged, free float-adjusted market capitalization indexes designed to measure the equity market performance of 22 developed markets, excluding the US & Canada. This index information is used to demonstrate the need to focus on the long term, not the short term.

4. Why Do I Need An Adviser?

Advisers who follow the investment recommendations of Matson Money help investors stay focused in the long run, suggest ways to keep portfolios diversified & balanced and coach you to make thoughtful financial decisions on the market.

Some Investors Still On The Sidelines

Everyone is well aware of the market crash that happened around 2008-2009 when many investors ran to the sidelines, essentially scared out of investing in stocks. Five to six years later, some of those investors are still waiting, because they are unsure if they can trust the stability of the market.  However, the stock market is inherently unpredictable, and waiting around for the right moment to get back in is pointless. There isn’t a “right” time to jump back into the market.  It’s just a matter of  moving forward and putting the crash behind us.

Mark Matson recently appeared on CNBC to share his thoughts on whether or not investors can trust the market again. CNBC’s host asked Matson if the recent Fed statement about the economy was a green light for U.S. equities. Matson explained that investors should not focus on short-term Fed statements and should forget about currencies.  Instead, investors should think long-term about equities, which have historically been one of the greatest wealth creation tools. While every adviser has its own strategy and past performance doesn’t guarantee future results, Matson and his team of advisers follow  this investment strategy.

Matson also discussed the realities of how investors reacted during the 2008 recession and about how the market has rebounded. Even so, investors are still hesitant to invest. Matson suggests buying equities and holding on tight, because the focus should be on the long term. Investors should stop trying to predict the next 10% market move, no one can foresee the future of the market.


Mark Matson Appears on Fox Business

Mark Matson was featured on ‘After the Bell’ that airs on the Fox Business channel. The stock market can be a tricky game to play because it’s always going up and down, making it hard to predict the best time to get the highest returns. Matson explains on the show how to seek the highest returns from your portfolio regardless of what the market is doing. During the recession, many people panicked in the market and ultimately left it because it was an uncertain time. However, those people are trying to wait for the perfect time to jump back in and the matter at hand is: there is no perfect time.

It’s understandable that investors can be leery of the market based on the 2008-2009 recession where we saw drops in numerous stocks but that time is behind us. Take for instance a time when the market is high, that doesn’t promise a safe venture to jump aboard; you have to be in it for the long haul and hold your ground. Whenever you decide to enter the market, don’t hesitate because there aren’t any guarantees that it will stay the same and that’s why you must think of long-term investments.

A strategy to avoid in your portfolio is going in on dividend paying stocks with high quality names because they turn your high capital gains into income. And you don’t want to pay income on your gains, you want to have capital gains so that you can extend them. Choosing stocks that represent a good market value is like having a lot of assets but a distressed price, which can be a good long-term share of that company. So you may want to build a portfolio that offsets the volatility in microcaps and which in turn may avoid the value in their short-term fixed income. Building a diversified, global portfolio is the game, not selling people what’s trending or popular.