Good Afternoon,
Attached is the most recent “By the Numbers” piece from MFS. The two stats I highlight today focus on a buy low/ sell high mentality to stock investing as well as an understanding of how difficult it is to predict spending decades into the future.
“An equal investment at the end of 2017 into the 10 stocks in the S&P 500 that gained at least +80% last year is down a collective 1.1% YTD as of Friday 11/30/18. An equal investment at the end of 2017 into the 10 stocks in the S&P 500 that lost at least 40% last year is up a collective +14.7% YTD as of Friday 11/30/18” (source: BTN Research)
“When President Franklin D. Roosevelt proposed the Social Security retirement program in 1935, FDR’s financial people projected that total Social Security expenditures would reach $1.3 billion in 1980 or 45 years into the future. The actual Social Security outlays in 1980 were $149 billion. Thus, the analysts’ 1935 estimate represented less than 1% of actual 1980 Social Security expenditures” (source: Social Security).
Regarding the first note, this would be a fairly difficult investing strategy, but it drives home the idea that the stocks that performed well last year are not always going to continue that trend. Conversely, holdings that have a poor year of performance can often provide a value opportunity.
The second point is not by any means a political point but rather indicates that accurately estimating outputs like national spending requirements decades into the future is nearly impossible. A variety of inputs come into play but population and demographic changes, and more importantly technological shifts play a major impact in any program of that nature.
Thank You,
Pete
Peter Malone, CFA
Research Analyst
Direct: 617.226.0030
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109
www.crestwoodadvisors.com
btn12318.pdf
