An investors day at the horse races
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An investors day at the horse races

September 4, 2019


Hello, my name is Terri Spath
and this is the Market Minute. What is the difference between
investing and gambling? If you go to the horse races
and bet on a horse and a jockey that’s gambling. Many people think of that or
do the same thing in investing. We are going to talk about the
difference between what we do, which is investing,
and gambling, which is what a lot of other people
do without even realizing it. So we were at some conferences
recently and we asked the room, what do you think stocks will
do by the end of the year? About half the room
raised their hand and said they
think they’ll go up; and the other half thought
that they would go down. Now those stock bulls
have some great arguments. For example, they
say that the Fed is going to continue to be
quite accommodative. That they will help the economy to grow. There’s also the argument
that the consumer is employed. Unemployment is quite low. And that consumer, being a
large driver of the economy, will continue to spend. And for that reason, it’s
important to continue to take risk. So that’s a bit of
a gamble though. What’s going to happen between
now and the end of the year? So we also asked the
same groups of people what’s going to happen to
interest rates between now and the end of the year? About half the room raised their hand and said they think
rates will fall; but the other half of the room
raised their hand at thought rates would go up. Again, a second gamble. One is betting on the horse race for
stocks going up between now and the end of the year. The second being a horse race of
interest rates going up or down between now and the
end of the year. So when we’re looking
at investing here, we’re not making a gamble. We don’t have a
horse in the race. We are constantly
adjusting our investments based on what’s going
on in the markets. So imagine if you
are at a horse race and you put money on a horse. You wait until the end of the race to find out if you lost all your
money if you made something. But what if you could make
those adjustments as the race is going on? Essentially that’s
what we’re doing as investors versus
gambling on the outcome of any particular stock
or bond investment or vehicle that is available. So investing is
adjusting constantly based on what’s
going on in the race without having a gamble on a
particular horse in the race. And that’s how we
like to do it here. We’re investors not gamblers. And that’s what I have for you this
time for the Market Minute. Thanks for joining me. I’ll see you again next time.

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