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 say in when the market inevitably will fall, and when the market inevitably will rise. Bear cycles will come, and bear cycles will go. That’s precisely why your long-term plan – the one tailored to your situation and created around your values – anticipates and prepares for such unavoidable occurrences. Even those as severe as the – in some respects – unprecedented events we’re living through now. And that’s why you so often hear from us to stay the course, because doing so gives you the best odds of realizing the benefits your plan is constructed to deliver. (more…)
Market Declines and the Long-Term Investor
By Jonathan Scheid, CFA, AIF®
The COVID-19 coronavirus sent stock markets and interest rates dramatically lower in the first quarter. As reports of the disease spreading outside of China grew, so did concern – panic at times – about what this meant for people’s health and broader, everyday lives. Governments and businesses stepped up preventative measures, but investors were concerned that the disruption would lead to an economic recession. (more…)
Hindsight is Clearer than Foresight
By Meir Statman
Predictions on November 7, 2016, the day before voters elected Donald Trump as our next president…
“As the historic 2016 U.S. presidential election approaches, major Wall Street analysts agree that the S&P 500 will likely sell off if Donald Trump wins, and at least hold gains if Hillary Clinton wins.” CNBC
The Case for Optimism
You might be reading this hunkered down in your basement, taking inventory of your supplies, or watching a DIY facemask tutorial on YouTube. If so, you’re like all of us navigating a fog of uncertainty that, so far, has left more questions than answers. To help offer you some firmer footing, allow us to paint a realistic picture of where we stand regarding financial markets and the economy more broadly. (more…)
Active Management’s Persistent Failure to Persistently Outperform
Since 2002, S&P Dow Jones Indices has published its biannual Indices Versus Active (SPIVA) reports, which compare the performance of actively managed equity funds to their appropriate index benchmarks. It also puts out a pair of scorecards each year that focus on persistence of performance. This is an important issue because if persistence is not significantly greater than should be expected at random, investors cannot separate skill-based performance (which might be able to persist) from luck-based performance (which eventually runs out). Following are some of the highlights from the just-released December 2019 Persistence Scorecard, with data through September 2019: (more…)
Resilience in the Time of COVID-19
The COVID-19 global pandemic and resulting economic uncertainly have had a profound effect on our sense of safety and control. The closest experience that many of us have had in our lifetimes was the financial crisis in 2007-2008 followed by a deep recession. Although the root causes are dramatically different, the impact on our sense of financial well-being is similar. Few of us expected to face such challenging economic circumstances again within such a relatively short period of time. (more…)
