The Weekly (1/26)

As we turned the page on 2023, we’ve been combing through annual reports from countless institutions to get a pulse on where we’ve been and where we might be going (one our personal favorites is JP Morgan’s Guide to Markets).

The reports are littered with graphs and visuals to present a mosaic of what investors believe to be true.

Sometimes, a picture is worth a thousand words so we thought it might be interesting this week to show, not tell. 

If we were to pick out a handful of charts, backed by empirical data, that the everyday investor should memorize, it would be some variation of the below.

For all the visual learners out there, we think you’ll love this.

1.) Markets bounce back

It may seem difficult in the moment but using history as a guide, market indexes generally bounce back so long as you give them enough time. Data since 1928 seems to corroborate that point of view. (Source)

2.) Even the best investors can’t time the market. 

Starting in 1965 if you invested at the peak of the market in each year, your annual return was 10.6%. If you timed the market perfectly, invested at the low point of each year, your return was 11.7%. The difference between great timing and lousy timing was only 1.1%. 

The takeaway? Even if your timing is absolutely perfect, the long-term delta in performance is relatively small. Time in the market. (Source)

3.) Time in the market is far more important than timing the market.

If the first chart didn’t convince you, this might. As you've likely seen over the last several months, there have been some vicious days where markets snap back, and studies show that missing a few of these up days can really impair long-term compounding. 

TLDR: Timing the market is always harder (virtually impossible) than focusing on time in the market (within your control).

4.) Investors can be their own worst enemy.

Why might the everyday investor underperform? It's usually their behavior. The above is an incredible visual of how behavior can impair long-term results.

5.) There will always be a smart-sounding reason to sell.

What made the list? A government shutdown, the bankruptcy of the auto industry, natural disasters, and the largest single-day index declines on record. All since 2008. There will always be a reason to sell but it's how you react that can meaningfully impact your ability to compound capital. 

As investors, we're inherently biased towards folks who take a long-term approach to capital allocation.

Pictures can say a thousand words and we hope these provided a bit of perspective on the psychology of long-term investor.

Have a great weekend,

- Your Titan team

Disclosures:

Titan Global Capital Management USA LLC (“Titan”) is an SEC registered investment adviser. Titan’s affiliate, Titan Global Technologies LLC (“TGT”), is a registered broker-dealer and member of FINRA/SIPC. Newsletters provided by Titan reflect the opinions of only the authors who are associated persons of Titan and do not reflect the views of Titan, or any of its subsidiaries or affiliates. They are meant for educational and informational purposes only, are not intended to serve as a recommendation to buy or sell any security and are not an offer to buy or sell a security. They are also not research reports and are not intended to serve as the basis for any investment decision. The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person. Any third-party information provided therein does not reflect the views of Titan or any of its subsidiaries or affiliates. All investments involve risk, and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not ensure a profit or protect against loss. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and clients may lose money, including their original investment and principal. Any rewards or free trials offered through Titan's client referral program are subject to full program terms & conditions.

Titan newsletters are curated digests of business news stories delivered daily. Titan newsletters’ goals are to make business and financial news accessible to all. The Titan newsletter team has editorial independence. Authority over all news decisions that appear in Titan newsletters, including what news we cover, our tone, and any accompanying media, lies with the Titan news team. Titan newsletter editors conduct daily research through a variety of primary (e.g., press releases, financial reports, public statements, economic data, social media accounts, interviews, etc.), and secondary sources (e.g., Fortune, The Wall Street Journal, The New York Times, Bloomberg, CNBC, TechCrunch, Jalopnik, Business Insider, Fox Business, etc.). The editors then determine the stories to be featured, covering a mix of headline news as well as less reported, yet relevant stories. Titan can’t cover everything, but the Titan newsletters aim to deliver a well-rounded serving of news. Titan newsletters make every attempt to report the facts fairly and accurately and provide “Takeaways” based on our understanding of the trends, our business experiences, and our personal opinions. We deliver the crucial information and our unique perspective so you can assess the news critically. Titan newsletters may contain forward-looking statements, which reflect the author’s current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. We do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Smart Cash is offered by Titan as one of its RIA product offerings. Titan's Smart Cash strives for tax optimization; after-tax yields are estimates, and actual outcomes may vary. Yields are subject to market conditions, will fluctuate, and are not a guarantee or forecast of future earnings. While Titan can provide general tax information and guidance, any information provided should not be taken as tax advice as Titan is not a tax professional. Consult a tax professional for personalized tax advice. View Smart Cash risks and disclosures at titan.com/smart-cash-disclosures.

Various Registered Investment Company products (or “Third Party Funds”) are offered by third-party fund families and investment companies on the platform as one of many potential investment options available to Titan’s clients, that may or may not be recommended based on an individual client’s investment objectives and risk tolerance. Certain Third Party Funds are offered through Titan Global Technologies LLC. Other Third Party Funds are offered to advisory clients by Titan. The Third Party Funds that are available on the platform are interval funds. Investments in interval funds are highly speculative and subject to a lack of liquidity that is generally available in other types of investments. Actual investment return and principal value is likely to fluctuate and may depreciate in value when redeemed. Liquidity and distributions are not guaranteed, and are subject to availability at the discretion of the Third Party Fund. Please review the Third Party Fund’s prospectus, available on www.titan.com, in its entirety for a full list of risks associated with investing in the interval fund before making any investment decision.

Cryptocurrency trading is provided by Bakkt Crypto Solutions LLC (“Bakkt”). Bakkt is not a registered broker-dealer or a member of SIPC or FINRA. Cryptocurrencies are not securities and are not FDIC or SIPC insured. Bakkt is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. Cryptocurrency execution services are provided by Bakkt (NMLS ID 1828849) through a software licensing agreement between Bakkt and Titan. Please ensure that you fully understand the risks involved before trading: https://bakkt.com/disclosures.

If there are substantive errors when published, corrections will appear in the following day’s material or within a business day of discovery of the error. When Titan or the author of a newsletter owns stock in a company mentioned, we’ll disclose it at the bottom of our newsletter.