Why a Stock Peak Isn’t a Cliff

Many investors may think a market high is a signal stocks are overvalued or have reached a ceiling. However, they may be surprised to find that the average returns one, three, and five years after a new month-end market high are similar to the average returns over any one-, three-, or five-year period. (more…)

The Cost of Trying To Time the Market

The impact of missing just a few of the market’s best days can be profound, as this look at a hypothetical investment in the stocks that make up the S&P 500 Index shows. Staying invested and focused on the long term helps to ensure that you’re in position to capture what the market has to offer.

        • A hypothetical $1,000 turns into $20,451 from 1990 through 2020. (more…)

You Can’t Get Outperformance Without Underperformance

by: Tim Maurer, CFP

Nobody minds market volatility when it’s in the upward direction. But recently we’ve gotten plenty of the type of volatility that we don’t like so much as investors, the kind that inspires headlines with words like “plunge” and that end with exclamation points.

It presents an opportunity, therefore, to remind ourselves of one of the central tenets of the art and science of investing: You can’t get outperformance without underperformance. (more…)

Will Inflation Hurt Stock Returns? Not Necessarily

Investors may wonder whether stock returns will suffer if inflation keeps rising. Here’s some good news: Inflation isn’t necessarily bad news for stocks.

• A look at equity performance in the past three decades does not show any reliable connection between periods of high (or low) inflation and US stock returns. (more…)

Should the US Debt Level Concern Investors?

If you’re like most of us, it’s hard to not keep an eye on how the U.S. economy is recovering from everything that’s happened since the start of 2020. However, it’s also easy to fixate on the gloomier economic indicators and try to interpret them as potential warning signs for the recovery and our portfolios. A popular one as of late is federal government debt, which reached a record $28 trillion in March. You might hear pundits and colleagues suggesting that this spells doom for the stock markets and your portfolio. Before making any rash decisions, let’s examine the relationship between federal debt and stock market performance. (more…)