Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

It Happens Suddenly

August 13, 2020 By Jeremy Jones, CFA

In the short-run, sentiment matters as much if not more than fundamentals. In the long run, it is fundamentals that win out.

The push and pull between sentiment and fundamentals drives many investors to make emotionally charged decisions that sabotage portfolio performance.

Stocks can climb higher slowly over a period of years and then crash suddenly, wiping out years of gains. Take the NYSE Composite Index as an example, because–let’s face it–the S&P is no longer representative of a broad portfolio of stocks.

From year-end 2012 through February 12, 2020 (7+ years), the NYSE composite gained 7.2% annually. From February 12 to March 23 of this year, the index fell 38%. Seven-plus years of gains were wiped out over the course of a few weeks.

The same can happen in reverse. UPS is a stock we follow and invest in for clients. Over the last five years, UPS shares have lagged the broader market. See our chart below.

 

 

Wall Street wasn’t happy that UPS was investing so much into its business to meet rising demand. Rising demand always seemed like a good problem to have in our view. And we were happy to sit patiently earning a 3% dividend yield that was rising 5.7% per year. A 3% yield with 5.7% growth gets you to almost 9% in one of America’s big blue chips.

What’s wrong with that?

Nothing, it turns out, but for the better part of five years UPS shares languished. Then suddenly, in May, UPS shares caught fire. E-commerce demand has soared because of COVID and UPS is passing higher costs onto customers.

Wall Street loves that idea.

Since mid-May, UPS shares are up better than 70%. As you can see in the chart above, the stock is now ahead of the industrials sector and the tech-laden S&P 500 since year-end 2015.

The actionable advice here is to invest with patience. Stocks that languish can suddenly rebound when sentiment shifts, and stocks that never seem to quit can suddenly crash.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • Investing in the Fog
  • Investing Takes Faith
  • My Biggest Investing Quarter Ever
  • Author
  • Recent Posts
Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Richard C. Young & Co., Ltd. was ranked #5 in CNBC's 2021 Financial Advisor Top 100. Jeremy is also a contributing editor of youngresearch.com.
Latest posts by Jeremy Jones, CFA (see all)
  • Are Google, Amazon, and Microsoft About to Crash This Specialized Real Estate Market? - June 29, 2022
  • Regulators’ Bungled Attempts to Cut Emissions Drove Oil Prices Higher - June 28, 2022
  • What Happens to Your Passwords When You Die? - June 27, 2022

Search Young Research

Most Popular

  • Here’s Why You Need a 15-Year Retirement Investment Plan
  • Why Work When Taxes Take It All?
  • The Power of a Compound Interest Table
  • Is the Great Job Boom Over?
  • Are Google, Amazon, and Microsoft About to Crash This Specialized Real Estate Market?
  • What Happens to Your Passwords When You Die?
  • Regulators' Bungled Attempts to Cut Emissions Drove Oil Prices Higher
  • Your Survival Guy: Clearing the Decks, Buying a Boat, Seeing the World and More
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • RURAL RENAISSANCE: America Finds the Country Again

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • An Assault on America’s Central Core
  • Hillary Clinton Claws at Relevance by Publicly Insulting Clarence Thomas
  • RURAL RENAISSANCE: America Finds the Country Again
  • The Best Investment Strategy is Simple, Like Analog Music
  • RED WAVE COMING? Americans Fear the Future of Biden’s Economy
  • Biden’s Approval Lower Now than Trump’s Was after January 6, 2021
  • With a Nod from Turkey, Finland and Sweden Speed Toward NATO Membership
  • 10th AMENDMENT: Dobbs Decision a Win for States’ Rights
  • What Just Happened? Fixing Its Historic Mistake
  • Why Work When Taxes Take It All?

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2022 | Terms & Conditions

 

Loading Comments...
 

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.