2016: The Most Typical Year Nobody Saw Coming

“It’s the 2008 Crisis all over again,” “Prepare for stocks to fall another 10%,” “World Economy Trapped in a ‘Death Spiral,’ ” “Sell Everything”1 — these were the loudest sentiments we heard from prominent industry participants in the first few weeks of 2016. Yet, as we close the books on another year’s positive gain, we’re reminded that stock market rallies don’t die of old age or pundit predictions. With the S&P 500 advancing 11.96%, we’ve now seen a cumulative gain of over 280% since the lows of 2009.
 
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Did You Earn 40% in 2016?

This article is featured in the winter edition of our 360 Insights Quarterly Client Newsletter.
 
That sounds like a crazy question, right? CDs, savings accounts and many bonds are paying next to nothing. Return expectations are down across the industry. Yet, if you held U.S. small companies from their lows in February of 2016 through mid-December you would have seen a more than 40% gain on that position, as measured by the Russell 2000 index. And who saw that coming? Continue reading

Thoughts on Predictions and the 2016 Election

istock_69302849_mediumThis blog is from our November issue of Portfolio Perspectives.
 
As the 2016 election results were coming in on the night of November 8, stock market futures seemed to point to a large stock market decline once the market opened the following morning.

 
Markets tend to dislike unexpected change, and as it became clear on election night that we’d have a shift in the political party of the presidency, market futures attempted to price that change in until ultimately opening up instead of down — despite what many “experts” were predicting.
 
This year we have seen a series of predictive failures, from the doom saying at the beginning of the year (“Sell everything”), to the failure of a peace referendum in Colombia, to Brexit. Continue reading

Recommended Reading About the “Brainiacs” at Dimensional

screen-shot-2016-06-21-at-3-38-20-pmI enjoyed reading the recent article and Blog written by Jason Zweig of the Wall Street Journal pertaining to Dimensional Fund Advisors (DFA). As a fan of Jason’s and his message I am a bit biased; however, I felt he captured the ethos of DFA with the quote from Ken French, “We don’t try to do magic. We’re doing engineering.”
 
As a long-time personal client of DFA, and as a firm where nearly $13 Billion dollars of our clients’ long-term investments are managed by DFA, we feel fortunate to have such a thoughtful approach to asset class construction. I believe their no-apologies approach to asset class construction has allowed us to increase our chance of building better portfolios for long-term investors.
 
I’d encourage you to read the following articles (subscription is required):
 
Making Billions With One Belief: The Markets Can’t Be Beat
 
Straight Talk from the Brainiacs at DFA
 
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There is Always a Reason to Sell…Unless You Want to Achieve Your Goals

blog_360_williamThis article is featured in the fall edition of our 360 Insights Quarterly Client Newsletter.
 
The problem with good advice is that it tends to be boring, especially when it comes to your portfolio.
 
This is a good thing.
 
For investors, excitement can be your worst enemy. Excitement generates headlines; it causes people to be greedy or fearful; it drives volatility and speculation — all resulting in too many people compromising their financial futures. Continue reading

Could You Be Your Own Worst Enemy?

This blog is from the September issue of Portfolio Perspectives.
 
“The investor’s chief problem — and even his worst enemy — is likely to be himself.”

 
— Benjamin Graham, The Intelligent Investor, 1949
 
The U.S. stock market (measured by the S&P 500) was down more than 5% two days following the historic Brexit vote. Investors sold out of stocks as it seemed the market was on course for a global market correction. Yet, only five trading days later the market was near its pre-Brexit level. I believe the panic was unwarranted and investors succumbed to their emotions yet again.
 
Why do so many investors make investment decisions based upon emotional reactions to short-term events? One possible answer: Because we’re human. It’s normal to feel anxiety during economic downturns or market turmoil — like Brexit — but acting upon those anxieties can lead to imprudent investment decisions. The key is not letting your emotions get in the way of your long-term investment plans. Continue reading

4 Ways to Help Manage Risks

Source: Dimensional. In U.S. dollars. Market cap data is free-float adjusted from Bloomberg securities data. Many small nations not displayed. Totals may not equal 100% due to rounding. Past Performance is not indicative of future results. All investments involve risk. Foreign securities involve additional risks including foreign currency changes, taxes and different accounting and financial reporting methods. Countries represented by their respective MSCI IMI(net div.). Indexes are unmanaged baskets of securities in which investors cannot directly invest; they do not reflect the payment of advisory fees or other expenses associated with specific investments or the management of an actual portfolio.

Source: Dimensional. In U.S. dollars. Market cap data is free-float adjusted from Bloomberg securities data. Many small nations not displayed. Totals may not equal 100% due to rounding. Past Performance is not indicative of future results. All investments involve risk. Foreign securities involve additional risks including foreign currency changes, taxes and different accounting and financial reporting methods. Countries represented by their respective MSCI IMI(net div.). Indexes are unmanaged baskets of securities in which investors cannot directly invest; they do not reflect the payment of advisory fees or other expenses associated with specific investments or the management of an actual portfolio.

This article is featured in the summer edition of our 360 Insights Quarterly Client Newsletter.
 
This is the third article of a four-part series to help you understand our investment approach — and why it matters to you.

 
Look up the word RISK in a thesaurus and you see words like danger and hazard, but also opportunity and fortune. Continue reading