The Market’s Response to Crisis

Performance of a Balanced Strategy

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 …

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Recent Market Volatility

US Market Intra-Year Gains and Declines VS Calendar Year Returns

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 …

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The Value Premium

Value Stocks Minus Growth Stocks

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 …

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Risk & Return are Related

Dimensions of Stock Returns around the world

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 …

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Only Investing Close to Home Can Cost Your Portfolio

equity returns of developed markets

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 …

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Global Diversification Helps Take the Guesswork Out of Investing

Annual Returns 1970 - 2017

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 …

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