mutual funds Archives - Leading Edge Financial

So, you want to be a stock picker? This video may make you think twice. There are stories of someone getting lucky with a homerun stock return but it’s rare. (More than 50% of stocks do not beat their market). Kevin explains why it’s so difficult to successfully invest in individual stocks and the effect of skew. He also examines the history of investment returns when owning the top 5 stocks individually versus owning those stocks within a diversified portfolio. The information may surprise you!

Explaining Skewness (from Investopedia.com)
– Skewness, in statistics, is the degree of distortion from the symmetrical bell curve in a probability distribution.
– Distributions can exhibit right (positive) skewness or left (negative) skewness to varying degrees.
– Investors note skewness when judging a return distribution because it, like kurtosis, considers the extremes of the data set rather than focusing solely on the average.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 06/08/2020 and are subject to change at any time due to the changes in market or economic conditions.

Bloomberg recently published its recession probability model. The model states that as of November 2019, the chance of a recession in the next 12 months is 26%. That sounds okay but what about this? The chances of NOT having a recession are 74%. Now that’s a pretty great number! But is this predictive model a function of the latest stock market performance or does it have real predictive power?

The stock market has performed nicely in the last few months as well as year-to-date. No wonder no one is talking recession at the moment. But the truth is, the exact timing of the recessions and market downturn is unknowable. In fact, we may not even know we’ve had a recession until it’s nearly over.

In this video, Charlie discusses the only surety is that we WILL have a recession sometime in the future and trying to follow the advice of prognosticators to determine when it will happen can be an expensive mistake. Ask anyone who pulled their money out of the markets in January 2019 because of the inverted yield curve. Now that’s a good predictor of recessions, right?

To view the recession tracker visit: Bloomberg, U.S. Recession Chances Inch Down to 26% Within Next 12 Months

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 12/04/2019 and are subject to change at any time due to the changes in market or economic conditions.

June 10, 2020