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Insights



Tune Out the Noise

There’s a reason that investors tend to only hear about “looming” market doom or “imminent” market growth. While many news outlets have an incentive to draw viewer attention with wildly bullish or bearish predictions, these sensationalized views may be a distraction to a sound investment approach. When tempted to make a radical change to your investment portfolio based on these headlines, it is important to recall some basic fundamentals to keep your plan on track. Tune out the noise: “Markets
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How Real Is Post-Pandemic Inflation Risk?

Governments around the world have made unprecedented efforts to support the global economy in response to COVID-19 by increasing spending and getting cash into the hands of both consumers and companies. Steps taken thus far may well have been necessary to help fight the pandemic’s economic fallout – but at what cost? Pundits are starting to point their collective finger at a potential dramatic increase in inflation, which is the idea that currency depreciates – buys less – as time
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When It’s Value vs. Growth, History Is on Value’s Side

There is pervasive historical evidence of value stocks outperforming growth stocks. Data covering nearly a century in the US, and nearly five decades of market data outside the US, support the notion that value stocks—those with lower relative prices—have higher expected returns. Recently, growth stocks have enjoyed a run of outperformance vs. their value counterparts. But while disappointing periods emerge from time to time, the principle that lower relative prices lead to higher expected returns remains the same. On average,
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Investing is Simple, but Not Easy

The academic literature on investing is filled with hundreds of anomalies. My own view is that the greatest anomaly of them all is that while investors idolize Warren Buffett, the “Oracle of Omaha”, so many not only tend to ignore his advice but often do the exact opposite. Consider the following advice he has offered on trying to time the market: – In his 1991 annual letter to shareholders, Buffett advised: “ We continue to make more money when snoring
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The Bumpy Road to the Market’s Long-Term Average

Since 1926, the US stock market has rewarded investors with an average annual return of about 10%. But it’s important to remember that returns in any given year may be sky-high, extremely poor, or somewhere in between. Annual returns came within two percentage points of the market’s long-term average of 10% in just six of the past 94 years. Yearly returns have ranged as high as up 54% and as low as down 43%. Since 1926, annual returns have been
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History Shows That Stock Gains Can Add Up After Big Declines

Sudden market downturns can be unsettling. But historically, US equity returns following sharp downturns have, on average, been positive. A broad market index tracking data since 1926 in the US shows that stocks have tended to deliver positive returns over one-year, three-year, and five-year periods following steep declines. Cumulative returns show this to striking effect. Five years after market declines of 10%, 20%, and 30%, the compounded returns all top 50%. Viewed in annualized terms across the longest, five-year period,
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April Planning Action Items

Stuff to Do While Quarantined: Clean Up Expenses and Financial Records “When we throw out the physical clutter, we clear our minds. When we throw out the mental clutter, we clear our souls.” –Gail Blanke I get it. We’re all scared. Something is happening that we’ve never experienced before. One thing that might help is to distract yourself while doing something productive. It’s easy to get frozen by news reports and fear. See if this helps get your mind on
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What Do You Do When Markets Are Down? Build Wealth!

It never feels great to see the stock market drop, especially by a lot, and then watch as your portfolio’s value falls with it. Fear, frustration, anger, anxiety, helplessness – each is a totally understandable and even appropriate response. But all circumstances, no matter what part of life they touch, come with context. And nothing about the context surrounding current market events happens to change what you can and cannot control. At an elemental level, for instance, we have no
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Recent Market Volatility

In recent days, the increase in volatility in the stock market has resulted in renewed anxiety for many investors. While it may be difficult to remain calm during a substantial market decline, it is important to remember that volatility is a normal part of investing. Additionally, for long-term investors, reacting emotionally to volatile markets may be more detrimental to portfolio performance than the drawdown itself. Intra-Year Declines Exhibit 1 shows calendar year returns for the US stock market since 1979, as well
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A Tale of Two Decades: Lessons for Long‑Term Investors

The first decade of the 21st century, and the second one that’s drawing to a close, have reinforced for investors some timeless market lessons: Returns can vary sharply from one period to another. Holding a broadly diversified portfolio can help smooth out the swings. And focusing on known drivers of higher expected returns can increase the potential for long-term success. Having a sound strategy built on those principles—and sticking to it through good times and bad—can be a rewarding investment
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