Garrett Capital Investment Management
Kelly’s passion for the capital markets began at the age of 18 when he purchased his first stock and this passion fuels a desire to help others make sound investment decisions. He started in the industry as a trader for Fidelity Investments in 2000 and received a bachelor’s degree from BYU in Business Management in 2002.
Prior to joining Garrett Capital, Kelly worked for Investools from TD Ameritrade® beginning in 2004. He taught investor conferences and online events, with as many as 950 attending at a time, on a variety of topics such as fundamental analysis, advanced option strategies, investor psychology, intermarket analysis, and income investing.
Kelly is best known amongst clients for using historical market analysis to avoid the financial crisis as well as identify a high probability bottom to occur after Nov 2008. Kelly managed a team of 14 investment instructors and was the lead talent for video and live instruction on the income investing course. Kelly has managed portfolios since 2002. He lives in Pleasant Grove with his wife and four children.
BS, Business Management, Brigham Young University
Assets Under Management:
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Regardless of the investment philosophy, strategy, or timeframe – the entry point does have an impact on returns. Let me use an extreme example to illustrate the point. The difference between investing in the S&P 500 in Oct 2007 and March 2009 is enormous. Had you been unlucky enough to put $100,000 in the S&P 500 in October 2007 it would have taken until March 2013, a whopping 5 ½ years, just to break even on price. Including dividend reinvestment, you’d be up a paltry 13%. On the flip side, if you had been wise enough to buy in March 2009, that investment would have grown over 120% with dividends reinvested by March 2013. Compounding that 107% additional return over a few years, let alone 20, and the result could be the difference between living the retirement of your dreams versus underfunding retirement and having to go back to work. Just ask a typical investor who was planning on retiring in 2009 how 2008 affected their retirement dreams. A large portfolio drawdown, near or early in retirement, can have a devastating impact on the portfolio’s ability to achieve investment objectives.
With a Schiller CAPE ratio of 28 (as of 6/30/17), US stocks are the 3rd most expensive in the world right now. Investing at these levels does not put the odds of good returns in your favor over the next decade. The last stage of a bull market, when prices reach the level of ‘irrational exuberance’, typically happens when stocks are at high valuations. This final stage can produce large gains; therefore, the opportunity cost of sitting and waiting for stocks to become less expensive can be high. Kudos to you for using a low-cost method of investing in a diversified portfolio. Regardless of how the market performs, this method puts the odds in your favor in the long-term. One thing to consider is to diversify not just your holdings, but also the strategies you are using. The performance of your current strategy of buying, holding, and consistently investing additional funds is still affected by how the markets perform. If the market enters bear territory, your portfolio (even though diversified), will still likely suffer a large drawdown. You could consider diversifying your lump sum into an actively managed strategy.
It is true that it is difficult to time the market over any timeframe; however, there are firms out there that have a track record of doing so. Garrett Capital has avoided bear markets for over 30 years. We keep portfolio drawdowns small using active management regardless of the market environment. There are many respected analysts out there such as Raoul Pal, Meb Faber, and Todd Harrison who believe that passive management is in a bubble and active management will once again shine when the markets become more volatile. My advice would be to do some research on firms experienced in active management and consider putting the lump sum investment to work in a strategy that will experience growth if the markets continue higher but will also preserve capital during times of market volatility.