title: I'm afraid of the stock market description: [AFW S.12.12] Securities Objection #12 published: true date: 2026-06-30T08:11:57.557Z tags: editor: markdown dateCreated: 2021-11-10T01:53:53.702Z
Read Nick's Around the Year, August 10 - What Do They Mean PDF
Script 1: The AMF ICA¶
This script handles the following objections: - "I'm afraid of the stock market." - "Will the market really perform in the future?"
The ICA brochure, specifically the fold-out center. You are going to have to remember two dates/time periods: how long before your prospect will retire, and how long they expect to live. You'll need to calculate both those times backward in history. This script is based on a dialog from the The Excellent Investment Advisor book by Nick Murray(hardcover).
Prospect: I'm afraid of the stock market. Advisor: Why? Prospect: blah, blah, blah. Advisor: On a scale of one to 10, how sure are you that your retirement date is coming up in 20 years? Prospect: 10, of course. Advisor: And, how certain are you that the stock market is going to collapse and you lose all your money, during that time? Prospect: Well, I don't know. . . it might happen. Advisor: So, in a sense, what you may be doing is pitting the uncertainty of some possible negative market event against the certainty of your needing an adequate retirement income on a known date. I can't advise you to do that. Look at it another way: you want to retire in 10 years, right? Prospect: Right. Advisor: And how long are you going to be retired? Prospect: Well, I hope 20 years. Advisor: So, we're looking at a total investing time horizon of something like 40 years, aren't we? Prospect: Yeah, I guess. Advisor: Terrific. Now, let's take a look at what was happening around 40 years ago. Pull out the ICA brochure, open the fold-out and navigate to 30 years (or the time frame in your scenario) back. Prospect: Ugh. Vietnam. Inflation. Riots in the streets. Kennedy. Martin Luther King. . . Advisor: Let's look at where this mutual fund was then. Point to the 2nd-row-from-the-bottom and read the number. Then go 20 years into the future (their retirement age). 20 years later, when you would have retired, it grew to $xxx! Now point to the current value of the ICA.And, if you would have lived another 20 years that would take us to (current time) and it would have grown to $yyy. Are you starting to understand? Prospect: Well, I guess. . . Advisor: So imagine an advisor, like myself, speaking to their client about retirement back in 1970. They'd be feeling the same way you are today, and worried about the future as you are. The lesson is simply, you can absolutely never become a good investor by watching or worrying about current events, but that you can almost always become a great investor by watching history, and being unfailingly optimistic about the future. You know you are going to retire in 20 years, so invest based upon the certainty of your retirement goal, not upon your uncertainty of the economy. Now, does it make sense?
Script 2: Six Predictions¶
Watch AMF 6 predictions VIDEO
Well, Michael we’ve been talking about investing for the long-term and taking ownership of the Great companies of the world, but I sense that you’re still a bit worried about the greater economic and political landscape, and wondering if now is really the best time to be investing - would that be fair to say? Ah, yeah I think so, it just seems like things are unstable and a little crazy right now. You know I hear what you’re saying about owning companies and standing firm for the long-term, but I’m just not sure I can see it turning around this time. Okay, you’re definitely not alone with those feelings, in fact a lot of people are feeling that way nowadays, but I happen to think now is a great time to be investing in companies. And I’d like to give you an example of why I believe that. I’d like to give you 6 economic and political predictions for the next three years, and then we’ll talk about how that looks for investing today. Does that sound okay? Yeah sure, I guess. Okay, well here’s what I think is going to happen... Both inflation and... ...unemployment will skyrocket to the highest rates in 3 and 4 decades, probably close to double digits on both. A major U.S. auto manufacturer will go bankrupt. A middle eastern dignitary will be killed. Israel will attack a neighboring country. There will be an assassination attempt on the President of the United States.
So, do you feel better about investing now? What? No, that sounds terrible. Well, would you believe that all of those things actually happened during a 3-yr period in the past? Yes, no, maybe o... Actually each of those things really did happen in just a 3 year period. From Dec 31, 1979 to Dec 31, 1982... Inflation rose to a 33-yr high of 13.5% (1980, highest since 1947 - 14.4%) Unemployment rose to a 41-yr high of 9.7% (1982, highest since 1941 - 9.9%) Chrysler went bankrupt - for the first time :) (1979 Bailout) The Egyptian President, Anwar Sadat, was assassinated. (October 6, 1981) Israel bombed nuclear reactor near Baghdad. (June 7, 1981) President Reagan had an assassination attempt on his life. (March 30, 1981)
Do you recall some of these events? Yes, I do. Sounds like a terrible 3-yr period if you just focus on these types of events. But, after that terrible period of time, did the world end? No. No, of course not, instead the world chose to move forward (and up). In fact... If, on day 1 of that 3-yr period, you had invested $100,000 into the 500 largest U.S. companies then at the end of that three years you would have had about $153,000, a little over 15% average annual rate of return. Does that sound pretty good? Yeah! Even more interesting is that if you had left that money invested for a full ten year period, your investment would have grown to over $503,000, which is an average annual rate of return of about 17.5%. Now, if 15% was good over 3 years, how would you like 17% over 10yrs? Very Good! Now, I’m not trying to suggest that we will see 15% return over the next 3 yrs or 17% returns over the next 10. That’s not the point. The point here is that the world doesn’t give us a bunch of good news to indicate when is a good time to invest. In fact, can you see that some of the best investing periods have begun with a bunch of bad news, not necessarily good news? Yeah, I suppose so. Right, that is because when the world is in the doldrums, human progress doesn’t know any better. The great companies of America and the world transcend all those greater political and economic struggles. There will always be individual companies going down (like Chrysler), which is why we want to own bundles of companies, there will always be countries in trouble financially, or in conflict politically, and we won’t know ahead of time when these things are going to happen. The good news here is that it doesn’t matter. The right time to invest is not when the start seemed aligned, because they never will. The right time to invest is when you have the money. Does that help give you some perspective of the value of owning companies through mutual funds?