Reading Between The Lines
Once we recognize that all investment portfolios eventually become retirement income portfolios, we can begin to focus on the regular recurring income that they produce… retired or not, the market value of your private portfolio (or of your 401k plan) has no purchasing power.
In late 1999, Microsoft Corporation (MSFT) common stock was at an all time high of $58.38 (split adjusted), and there were thousands of MSFT multi-millionaires out there confident that their retirement was secure…. with a guaranteed monthly income of: (send me an email with the figure).
Many years later, one of those millionaires, and a golf buddy of mine, disclosed that he had just sold the 7 series BMW he had purchased with the proceeds of his MSFT stock… the one “asset” he still had from his dot.com fortune. Pushing 60, he just couldn’t bear the memory any longer.
If only he had sold the entire portfolio… or converted enough to tax free Closed End Funds to assure a lifetime income.
By September 2000, MSFT stock had fallen by almost 50%; nearly 15 years later, with the market near its highest level ever, MSFT (at $47.60) remains 18% below its 1999 level… it didn’t pay a dividend until 2003, and only 2.6% at today’s rate.
Most Mutual Fund portfolios contained MSFT and hundreds of similar NASDAQ securities… MCIM portfolios contained none.
It took more than 15 years for NASDAQ to regain its 1999 level… how many of the 1999 heroes survived?
Today, most Mutual Fund investment portfolios and ETF gaming devices contain 1999 Microsoft look alikes, and most pay very little income… and MCIM portfolios?
What’s in your wallet?