We've told you for years to "Ignore the Fed."
Even Ben Bernanke, former chairman of the U.S. Federal Reserve, described his old job as "98% talk and 2% action."
Officially... the Fed's job is to stabilize the economy – controlling inflation and encouraging growth – by setting the country's monetary policy. When you oversee the world's largest economy, at around $21 trillion GDP, that easily makes you one of the most influential men in the world.
But Bernanke's comments acknowledge the job is as much about managing the public's mood as it is about manipulating interest rates and money supply.
And today, folks are optimistic, but also worried. They're wondering...
"How long will the bull market last?"
"Should I sell before a crash?"
"Where should I put my money to make more money?"
The major concern we've talked about recently is that with interest rates near zero, it's tough to find a decent yield anywhere.
For decades, the prevailing wisdom in retirement planning is to design a portfolio that's 60% in stocks and 40% in bonds... or maybe even 50-50 if you're a little older.
Over the past 90 years... 91% of the price appreciation in a classic 60/40 portfolio happened between 1984 and 2007.
That means if you put $100,000 into a 60/40 portfolio in 1931... it would be worth $22.5 million today – but most of the growth, $20.4 million of it, happened between '84 and '07.
Let me say that another way: Investing with the 60/40 strategy from 1931 to 1984 brought you only $2.1 million... that's 54 years of making nearly nothing.
If a portfolio is set up like this... it's flawed. Plain and simple because, as you can see, this strategy has historic periods when it doesn't perform well at all.
What do those periods of extreme underperformance have in common? They occurred when interest rates were close to zero – like in the 1930s and today. They're also common during times of high inflation – like we saw in the 1970s and like we're starting to see today as well.
It's during times like this that adding nontraditional investments can vastly improve your portfolio's performance.
Next Wednesday, July 21, my colleague Eric Wade is going to explain why there's a totally new way for you to "opt out" of the traditional financial world... and generate huge income streams available nowhere else today.
So if you want to know how to keep your money working for you, click here to learn more now.
Now it's time for this week's Q&A. Please keep sending your questions, comments, and suggestions to [email protected].
Q: I'm hearing stories about some of my friends taking atorvastatin, and I wonder if any herbs or vitamins can be used in place of this statin? Thank you, Doc. – F.T.
A: We get questions about statins a lot, and I'm sure that if you're asking me, you know exactly how I feel about them...
As far as other herbs and vitamins for heart health, I don't typically recommend their use because of how unregulated the supplement market is. Certain supplements could also interact in unexpected ways with medications that you may be taking for other health issues.
I never suggest quitting any prescription on your own... Alternative treatments should always be a conversation had with your doctor. If they're not willing to have that conversation, it's probably time to find yourself a new doctor.
That being said, certain lifestyle modifications are very effective for protecting the heart. Things like avoiding fast food, exercising regularly, and destressing daily can make a huge difference. Here are two articles where I dive into this topic a little further: The Heavy Cost of Lipitor and The Real Danger Our Hearts Face.
Q: I'm a brand-new subscriber. I have really benefited from the Apple Watch. The fitness app that reminds me to get up from the computer for a few minutes every hour showed me just how long I would often sit hunched over the computer in my office. Not good! The Fitness+ app is a joy to use with so many different workouts, short and long, cardio, strength, and flexibility. There are enough apps appropriate for a 75-year-old to keep me working at it to "close my rings," which I rarely did before using the app. – R.H.
A: I'm so glad that you're making great use of that app and your Apple Watch! It's amazing how eye-opening it can be to track a little data. It's vital practice for accountability.
One of my researchers just had a baby, and she's making use of two apps to help her get back into shape. She uses a Fitbit to keep track of how much she gets up and moves around throughout the day. This comes with an app on her phone that will count and store her daily step – and offer her other helpful tips. Her watch even tells her when she should start winding down for bed in the evening.
She also uses an app called Lose It! to track her calorie intake. This has been very illuminating, as we typically underestimate the number of calories we consume each day – by a lot! – if we're not keeping a close eye on it.
Both of these apps have free versions, by the way, which is right up our alley. Keep up the great work closing your rings, and thanks for sharing!
What We're Reading...
- Did you miss it? Act now to protect your assets from disaster.
- Something different: A 'wobble' in the moon's orbit could result in record flooding.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
July 16, 2021