I’m old enough to remember the 90s. In fact, I started college in 1998. I studied computer science. And I remember DISTINCTLY how pumped everyone was about the internet and tech stocks. They had MASSIVE returns in the 90s. Everyone KNEW the internet and technology was the future. And they were right! Look at us now. You’re reading this on your phone while sitting on the toilet. The future is now.‎
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But do you know what’s crazy? If you invested in QQQ, the tech heavy Nasdaq ETF starting in January of 2000. Your investment would STILL BE UNDERPERFORMING the total US stock market TO THIS DAY. Because prices got SO inflated after the late 90s that when you bought into those tech stocks, you had to pay this massively big price. Even though the internet DID deliver in the way people predicted, the price was still too high at that point!‎
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And now I kind of feel like we’re living through it again. Tesla, bitcoin, ARK ETFs. Everyone is SO pumped about them, and the prices are sky high. But are you paying so much that you have 20 years of underperformance ahead of you?‎
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Do you know what everyone HATES right now? International and bonds. No one EVER asks me if they should be increasing their international or bond allocations. You know why everyone hates those two asset classes? Because they underperformed the last 10 years. But that’s not what we care about. We care about what’s going to happen the NEXT ten years. And do you know what that is? I don’t! But I do know it’s going to be different than the last 10 years.‎
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So beware of chasing past performance. Remember the high expectations are priced into the sky high prices of these assets classes. Don’t be zigging when everyone else is zigging too. Be buying and holding globally diversified index funds to make sure you own the NEXT best asset class.‎
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As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.‎
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-Jeremy‎
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