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.[1] 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
Lessons for the Next Crisis
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
Quit Monkeying Around!
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!
Investment Shock Absorbers
Ever ridden in a car with worn-out shock absorbers? Every bump is jarring, every corner stomach-churning, and every red light an excuse to assume the brace position. Owning an undiversified portfolio can trigger similar reactions. Explore how spreading your portfolio across different securities, sectors, and countries can smooth the bumpy and unpredictable ride that lies between you and your long-term investment goals, with Dimensional Funds VP Jim Parker in the attached article "Investment … [Read more...] about Investment Shock Absorbers
Rising Above the Noise
Some investment professionals work hard to make their work confusing. They believe they have a vested interest in creating investor confusion. They use jargon that can intimidate and make it difficult for you to understand relatively straightforward concepts. But investing is actually not that complicated. We'll explore three different methods that investors use to make decisions about their money, and we'll talk about where you should be with your own approach to your portfolio. Exhibit 1 … [Read more...] about Rising Above the Noise
2016 Market Review
In 2016, the US market reached new highs and stocks in a majority of developed and emerging market countries delivered positive returns. The year began with anxiety over China's stock market and economy, falling oil prices, a potential US recession, and negative interest rates in Japan. US equity markets were in steep decline and had the worst start of any year on record. The markets began improving in mid-February through midyear. Investors also faced uncertainty from the Brexit vote in June … [Read more...] about 2016 Market Review