Aug 2016 – Why it can be hard to make money in the stock market
Hint: It’s not what you think, it’s what you feel. One of the greatest ironies of investing is that some of the simplest advice is often the most important and the most difficult to stick to. For years, decades even, we have advocated “profits through patience”, accepting the returns the global stock markets provide without the need to outguess the next short term move. Through wars, recessions, elections, natural disasters and other major news events, persistence has paid off. $1,000 invested in the US Stock Market (S&P 5001) in January of 1970 grew to just under $90,000 by...
Read MoreJune 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 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 MoreSept 2015: What can past market declines teach us?
Living with a market decline isn’t easy and are the last thing most investors want to experience, but they are an inevitable
part of investing. Perhaps a little historical background can help you put stock market declines in perspective.
Usually we write our own newsletters but we received the following well written article from American Funds about market volatility
and wanted to share it with you.
Aug 2015 : 5 Things Investors Shouldn’t Do Now
This very short article by Jason Zweig at the Wall Street Journal captures the essence of the advice we have been sharing with clients about market downturns….
Stocks slumped world-wide this week, with U.S. and European markets off more than 5% and the Shanghai Composite Index losing more than 11%. Oil prices also skidded, dropping more than 6%. Traders feared that slowing growth in China, the devaluation of the Chinese currency and the overhang of too much debt could stifle global economic recovery.
Here are five things you should know about how not to react…
