June 2016 – Brexit Commentary
The “Brexit” vote has already had an immediate short term impact on global stock markets largely because speculators had positioned themselves on Monday for the opposite outcome – for the UK to remain in the EU. Fortunately for us, we invest with goals set for the long term…
Read More2016 Q1: Time, Diversification & Volatility of Returns
Although it didn’t start that way, the first three months of 2016 produced moderately positive returns for client portfolios. At the midpoint of the quarter we saw headlines in the Wall Street Journal such as: “Stocks Tumble as Investors Flee to Safety”. At times like this it can appear that we aren’t earning the returns we typically use in our long-term financial planning. Investment returns are disappointingly low after two severe market corrections in the last fifteen years. Being diversified among different types of stocks as well as fixed income (bonds) allows us to ride out the...
Read MoreWhat good can come from a down market?
As you know, the second half of 2015 through mid-February was a rough patch in the global stock markets. Investors can choose to do nothing and wait for their holdings to recover over time as they always have or to take action. As your portfolio manager, in cases where we judged losses were sufficient to justify the expense of trading, we entered into trades in taxable accounts called “tax-loss harvesting”.
Read MoreDoes the rocky start indicate poor returns in 2016?
Global markets are off to a rough start this year. Some media outlets are suggesting the negative results so far in 2016 might provide a good indicator to the direction of the market for the full year. The attached Dimensional Fund Advisors research finds the opposite is more common.
Market declines of 10% and 20% are normal and are typically followed by decent returns so selling after such a decline (i.e. now) usually makes little sense. While a current decline can feel like an air pocket on an airplane, from a historical perspective the losses we are experiencing aren’t unusual and are the necessary expected cost of earning long term returns in excess of bank CDs.
Please read the attached article and let us know if you have any questions or comments.
Read MoreMarket Summary – Q4 2015
Thank you all for hanging in through a fairly volatile year. With our collective long term time horizon, we continue to try to help clients calibrate their expectations so that the gyrations during a year such as 2015 are not unexpected. Outside the financial markets, surprises during 2015 include such events as the first Triple Crown winner in 37 years, the horrific Paris terrorist attack, and the first NBA championship for the Golden State Warriors in 40 years…
Read More