Average Investors Underperformed: Major Indices 1998 – 2017


Stop Changing Lanes

What This Chart Means to You: Don’t try to time getting in and out of the market. It’s like trying to go faster on a crowded freeway by constantly changing lanes, only to discover you are going slower than if you had just stayed in the lane you were in. Over the past 20 years, the S&P 500 returned an annual average of 7.20% but average U.S. stock investors earned just 5.29%, primarily because they tried to outsmart the market but kept getting in and out at the wrong times. Many investors think they know when to buy and sell. But this means they have to be right twice: picking the right time to buy and the right time to sell. Other investors might make emotional decisions, like pulling out of the market when stocks are losing.

This is where the experience and guidance of your financial advisor can make all the difference and help you stay “in your lane” and headed towards your goals.

The fact that buy-and-hold has been a successful strategy in the past does not guarantee that it will continue to be successful in the future. Equities, bonds, and other asset classes have different risk profiles, which should be considered when investing. Bonds are subject to market and interest rate risk. Bond values will decline as interest rates rise and/or issuer’s creditworthiness declines, and are subject to availability and changes in price. Stock investing involves risks, including increased volatility (up and down movement in the value of your assets) and loss of principal. Past performance is not indicative of future results. Diversification does not guarantee a profit or protect against a loss. Investors with time horizons of less than five years should consider minimizing or avoiding investing in common stocks.
The views expressed are those of Loring Ward and are not intended as investment advice, or a forecast or guarantee of future results. All investments involve risk, including the loss of principal and cannot be guaranteed against loss by a bank, custodian, or any other financial institution. ©2018 LWI Financial Inc. All rights reserved. Investment advisory services provided by LWI Financial Inc. (“Loring Ward”). Securities transactions offered through its affiliate, Loring Ward Securities Inc., member FINRA/SIPC. R 18-175 (6/20)