While some investors watch their returns ricochet as quickly as the trends they follow, one RIA knows that the trends – and Wall Street – aren’t always right. John Riley, founder of Cornerstone Investment Services, LLC, and a Registered Research Analyst, offers his clients an alternative, along with a healthy dose of financial literacy education.

“There are a number of Wall Street truisms that we have debunked over the years,” Riley said.

One such commonly held belief is that retired investors need to be in bonds for one reason – age. “This goes against everything we understand about cycles,” he said, adding that he wishes retired people would stop listening to Wall Street rhetoric. “The bond market doesn’t know how old you are.”

Riley explained that even during retirement, income needs to keep up with inflation. Retirees need to have investments that will provide a rising income. Portfolios need to evolve with the markets, especially during retirement, which is why active management is crucial for success in this area.

Riley also argues against the mainstream philosophy that stocks are always the best investment option. “It has been my experience that much of Wall Street has the same sales pitch,” he explained. “When stocks are up, buy more – they are obviously the best investment. When stocks are down, buy more – this is just a correction, and you need to take advantage of the low prices. You rarely see a major firm telling clients the market is overvalued and it is time to raise cash.”

Instead, CIS looks beyond the usual investments in stocks and bonds, turning alternatively to metals, energies and inverse ETFs. And, they investigate a broad scope of opportunities, looking globally for the strongest growth options.

“The most prevalent problem today’s investors face,” Riley explained, “is a shift away from research and toward a gambling mentality.” This, he says, has been caused by the media “sportifying” the market so that investors feel like they need to tune in to see the daily wins, the same as they would baseball scores.

“Every game has to be won, every inning, every at bat,” he said. “And that’s not the way investing is. Investing is a long term process. You own a business. But people don’t view it that way anymore,” Riley mused, adding that stocks are now being viewed more as lottery tickets than as actual ownership shares in businesses that naturally fluctuate through ups and downs without being in trouble. 

“Fundamentals always win. Eventually, fundamentals will come back, and when they do – there are going to be a lot of people who are hurt,” he cautioned.

Riley added that investors will be best served by expanding their financial literacy beyond the snippets seen on TV. “Those,” he said, “promote an immediate gratification mindset that is contrary to the most historically successful strategies.”

For more information visit:  www.cornerstoneri.com