I have found that the importance of having an investment philosophy—one that is robust and that you can stick with— cannot be overstated." —David Booth The US stock market has delivered an average annual return of around 10% since 1926. But short-term results may vary, and in any given period stock returns can be positive, negative, or flat. When setting expectations, it's helpful to see the range of outcomes experienced by investors historically. For example, how often … [Read more...] about The Uncommon Average
Capital markets have rewarded investors over the long term, and having an investment approach you can stick with may better prepare you for the next crisis and its aftermath. It will soon be the 10-year anniversary of when, in early October 2007, the S&P 500 Index hit what was its highest point before losing more than half its value over the next year and a half during the global financial crisis. Over the coming weeks and months, as other anniversaries of major crisis-related events pass … [Read more...] about Lessons for the Next Crisis
Haphazardly selecting stocks by the toss of a dart is not an efficient or reliable way to invest. In the world of investment management there is an oft-discussed idea that blindfolded monkeys throwing darts at pages of stock listings can select portfolios that will do just as well, if not better, than both the market and the average portfolio constructed by professional money managers. If this is true, why might it be the case? THE DART BOARD Exhibit 1 shows the components of the … [Read more...] about Quit Monkeying Around!
You've lived through 90 days of financial headlines and speculation of what's to come. Enjoy a few minutes of thoughtful reflection with our Q2 2017 Market Review. This report features world capital market performance and a timeline of events for the past quarter. It begins with a global overview, then features the returns of stock and bond asset classes in the US and international markets. Our Market Review is updated quarterly and always available on our Home Page. … [Read more...] about Q2 2017 Market Review Posted
Costs matter. Whether you're buying a car or selecting an investment strategy, the costs you expect to pay are likely to be an important factor in making any major financial decision. People rely on a lot of different information about costs to help inform these decisions. When you buy a car, for example, the sticker price tells you approximately how much you can expect to pay for the car itself. But the sticker price is only one part of the overall cost of owning a car. Other things like sales … [Read more...] about Getting What You Don’t Pay For
Unlike bond prices, which tend to go down when yields go up, stock prices might rise or fall with changes in interest rates. Should stock investors worry about changes in interest rates? Research shows that, like stock prices, changes in interest rates and bond prices are largely unpredictable. It follows that an investment strategy based upon attempting to exploit these sorts of changes isn't likely to be a fruitful endeavor. Despite the unpredictable nature of interest rate changes, … [Read more...] about When Rates Go Up, Do Stocks Go Down?