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Insights



The Next Normal

A year ago, at the end of March 2020, the S&P 500 was down nearly 20%(1) and the world was scrambling into lockdown. Many experts wrote articles telling us where we would be in a year. I don’t remember reading any that said the S&P 500 Index would be up 56% over the next 12 months. But that’s what happened. I didn’t predict any of that. I never do. Last June, I spoke about the Old Normal and how we
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To Bit or Not to Bit: What Should Investors Make of Bitcoin Mania?

Bitcoin and other cryptocurrencies are receiving intense media coverage, prompting many investors to wonder whether these new types of electronic money deserve a place in their portfolios. Cryptocurrencies such as bitcoin emerged only in the past decade. Unlike traditional money, no paper notes or metal coins are involved. No central bank issues the currency, and no regulator or nation state stands behind it. Instead, cryptocurrencies are a form of code made by computers and stored in a digital wallet. In
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Tales from the Crypto: How to Think About Bitcoin

“Everything you don’t understand about money combined with everything you don’t understand about computers.”- HBO’s Last Week Tonight with John Oliver, March 11, 2018 Bitcoin and related cryptocurrencies (now numbering in the thousands) are the subject of much debate and fascination. Given bitcoin’s dramatic price changes, it is not surprising that many are speculating about its possible role in a portfolio.   In its relatively short existence, bitcoin has proved extraordinarily volatile, sometimes gaining or losing more than 40% in
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Large and In Charge? Giant Firms atop Market Is Nothing New

A top-heavy stock market with the largest 10 stocks accounting for over 20% of market capitalization and a marquee technology firm perched at No. 1? This sounds like a description of the current US stock market, dominated by Apple and the other FAANG stocks (1), but it is actually a reference to 1967, when IBM represented a larger portion of the market than Apple at the end of 2019 (5.8% vs. 4.1%). As we see in Exhibit 1, it is
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Think Investing Is a Game? Stop.

It’s easy to view the stories of market speculation that have dominated the news recently as cautionary tales for individual investors. But we can also look at the current moment as an opportunity to welcome a new group of investors to the market: those who have been drawn in by all the high-stakes action, and yet may want a consistent, long-term investment solution that doesn’t keep them up at night. This is probably a good time to mention that investing
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Flexibility in Practice: How We Handled GameStop

GameStop has been front and center in the financial news on account of the stock’s significant price volatility over a few weeks. And that has put it top of mind for many clients, as we’ve been fielding questions on how GameStop’s volatility was handled in our portfolios. This incident serves as an opportunity to highlight how Dimensional’s investment process is built to handle developments within markets, given that many of our portfolios held GameStop in January. GameStop’s rise and fall
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FANMAG: Because FAANGs Are So Yesterday

KEY TAKEAWAYS FANMAG returns have been extreme relative to their contemporaries, but not their predecessors—their performance has been in line with the average top performers throughout US stock market history. The FANMAGs were the big winners from a broader group of large tech companies, most of whom have lagged the market. Following the popularity of the FAANG stocks, FANMAGs are the current fad. But history suggests fad-based investing is no substitute for broad diversification and a consistent approach. A handful
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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 95 years. Yearly returns have ranged as high as up 54% and as low as down 43%. Since 1926, annual returns have been positive 70
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February Planning Action Items

Schedule a time with your Independent CERTIFIED FINANCIAL PLANNER TM to discuss the following 10 key tax planning items: Review your W2 and 1099s. Your 1099s and W2s provide valuable information about your earnings and investing habits. If your salary has increased, have you also increased your savings and investment rates? Apply income/salary to living expenses, and bonuses/stock options proceeds to wealth building goals. Review the tax efficiency of your investment strategy. If your mutual funds made sizable capital gains
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Gauging Market Expectations?

A recent flurry of return spikes for a handful of US stocks has captivated investors and non investors alike. Wall Street news trending on social media even amid an NFL playoff season is indeed an unusual event. So, what should investors make of these dramatic price movements? A good place to start is with prices themselves. Prices reflect discount rates applied to the expected future cash flows of companies. One can interpret these discount rates as the expected return demanded
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