For twenty five years Holyagnostic was professionally in the money growing business. He began with Presbyterian Ministers' Fund, a company that at the time was the oldest life insurance company in America (1711). Benjamin Franklin did their printing. Many of the signers of the Declaration of Independence were clients. The Harvest Fund was their one and only mutual fund. The company worked exclusively with ministers and only hired reps who were ministers as well.
After seven years, Holy formed his own company, Minister's Financial Services, in order to expand the investment options for his ministerial clients.
The last seven of the twenty five years were spent as a National Manager of an estate planning company and Financial Consultant with Merrill Lynch Private Client Group.
The one constant throughout the career was that most of the folk for whom it was Holy's job to grow money were ministers. And he was very comfortable in that world. Being a preacher's kid and spending twelve years getting the finest education that Texas Baptists could provide while pastoring or serving in other church staff positions created a confluence of experience that enhanced his ability to work in an ecclesiastical world in a secular capacity.
With that kind of background and training Holy's ears perked up when reading a minister's blog in July of 2010 that contained the announcement that the Rev. was getting completely out of the stock market. One year later another minister blogger reported that he was doing exactly the same thing.
Holy has tremendous respect for both of these pastors. They have both taken on Baptist establishments, one with what we used to call the Foreign Mission Board and the other with what was known as the Baptist General Convention of Texas. They both confronted and challenged intrenched bureaucracies without losing integrity or making fools of themselves. Their endeavors, examples, and styles have made them heroes in Holy's eyes.
But investment gurus they are not. Holy expressed his disagreement in the comment section of their blogs. One has cut off comments which removed Holy's response and the other deleted his post Hopefully, neither removals were done in response to Holy, but the action took from the net Holy's brilliant :) rebuttal of their investment decisions.
Let's analyze the decisions and recreate Holy's advice.
Both decisions were made on the basis of fear. In investing, that emotion is as poisonous as its polar opposite, greed. At the beginning of July in 2010 the market had been in correction mode for a bit. That is the professional's euphemism for the fact that the market was down. The first investor didn't want to lose anymore. He was going to bonds instead of stocks. The second investor in July 2011 had some profit, but was reading headlines that sounded ominous. He too was afraid of loss, but was not specific where he was going to park his stock exit money.
Both decisions are an attempt to time the market. The most exceptional professionals cannot do this well. While there is a bell that rings on the New York Stock exchange at the beginning and close of each day's trading, there is no such signal at the top and bottom of the market's cycles. And one has to make two correct decisions--when to get out (the one already made by our minister investors) and when to get back into the fray. Then they must continue to make their moves again and again and again...
After a year we now have performance numbers that enable us to evaluate whether the decision to exit at the end of June 2010 was a good one. Almost to the day he posted his blog, the market (as measured by the Wilshire 5000 index) was reaching its LOW for the year and over the next 12 months would blast upward by 26.6%. The only way we can completely gauge his timing prowess is to know if he got back in at some point during that year, but the fact that he has already blown the first decision, does not bode well for his abilities to make the second decision with any success.
Our second minister wrote of his exit around July 6 and the market is up 2.3% since, an annual pace of 68%. The numbers do not look good for him either. But it is early. He too will have to make the 2nd timing decision in the future.
As the Apostle Paul liked to say, "There is a more excellent way."
To be continued...
