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The Market’s Resiliency Discipline is an integral element to successful investing. However, even the most stalwart investors can be shaken when a clear crisis has hit. Fortunately, the market has a stronger resolve. The chart above shows performance of a balanced investment strategy following a few historical crises. The subsequent one-, three-, and five-year annualized […]

After a period of relative calm in the markets, in recent days the increase in volatility in the stock market has resulted in renewed anxiety for many investors. From September 30 to October 10, the US market (as measured by the Russell 3000 Index) fell 4.8%, resulting in many investors wondering what the future holds

The US Value Premium—Year by Year Value stocks have offered an average long-term return premium over growth stocks, which may reflect compensation for bearing higher systematic risk. However, short-term fluctuations in the value premium (relative to growth stocks) can be extreme. The light blue bars in the graph indicate the years in which the US

Although Wall Street and the media encourage us to believe that we can find a ‘free lunch,’ these opportunities are very difficult to exploit. In other word, there are no low-risk/high expected return investments. Here’s why: if an investment offered a disproportionately higher return for the risk involved, word would spread and others would try

Safety In Numbers When investing, people too often try to seek out the highest number with very little though of the consequences. Whatever has the highest return must be the best investment. However, a crucial rule of investing is high returns always come with higher volatility. Large increases in value are often followed with large

Safety In Numbers As we’ve been discussing, diversification is a necessary element to any portfolio. Investing across several uncorrelated asset classes benefits a portfolio’s overall return. However, diversification does not stop there. Smarter investors think globally. This table shows the annual performance in US dollar terms of 21 developed-country stock markets for the past 14

The Investing Challenge Because asset classes around the world do not behave consistently or predictably, combining them in diversified balanced strategies can eliminate much of this randomness. The chart features the annual performance of major asset classes in the US, international, and emerging markets over a 48-year period. In both US and non-US markets, there