Clouds Ahead: They Are All Lying

By Gary Silverman, CFP®

We’re in a series about truths that are not fun but need to be known and, in many cases, acted upon. Or as I’ve been saying, I’m whacking you upside the head to get your attention. Today we were going to tackle spending. But then I got an email….

I get a lot of emails; and, as you’d expect, most of them concern money and investing. This one was no different. It was from an investment company touting one of their ETFs (Exchange Traded Fund). As with any company sending me information about a fund, they think their ETF is so good that I need to look at the contents of said email and call them ASAP so they can tell me even more good things about it. Certainly, if I truly cared, I would buy the fund for my clients’ portfolios. They even included a chart.

I love charts.

The chart showed how the fund performed just as good at the S&P 500 stock index with a lot less risk. In other words, it went up just as much with less bouncing around. Who wouldn’t like that? But then, as I am prone to do, I looked closely at the chart and noticed that it ran from March 2021 to November 2022. That’s a strange date range with it currently being June 2023. It seemed to cut things a bit short.

Thinking there might be shenanigans involved, I went online and pulled out my own chart comparing the fund and the S&P 500 Index. First, their chart was correct. From March 2021 through the end of November 2022 their fund did indeed grow as much as the index with less risk.

But….

When expanding the chart from November until a week ago, a different story was painted. From that point while the S&P 500 continued to grow the ETF being hawked began to fall, and by a lot.

Now, if an investment firm thinks it can fool an investment professional who is as experienced, intelligent, and good looking as me, then trust me, they would have no reservations doing the same to you. And they do!

So, an added fish-to-the-head truth to add to last week’s list is:

• They’re lying to you.

Who? Just assume when it comes to investing that everyone is lying to you (well, except me) until you confirm it yourself. Heck, I tell you to do that with what I say, so it should be second nature by now. But often folks think, “They can’t be lying, or they’d get caught.” And I guess in this situation you’d be right. They didn’t lie…they just misled. Buyer beware!

Come back next week and we’ll (maybe) get to that spending discussion.

May God protect the innocents in Ukraine.