Hindsight is Clearer Than Foresight

This article is featured in the winter edition of our 360 Insights Quarterly Client Newsletter.
Predictions on November 7, 2016, the day before voters elected Donald Trump as our next president…
“As the historic 2016 U.S. presidential election approaches, major Wall Street analysts agree that the S&P 500 will likely sell off if Donald Trump wins, and at least hold gains if Hillary Clinton wins.” CNBC
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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

The Odds Favor the Optimist

This blog is from the December issue of Portfolio Perspectives.
When the stock market gets rocked it’s easy to hit the proverbial panic button and sell. Many investors believe that to avoid large losses they need to sell once the stock market drops more than 5 or 10 percent. Panicking during bouts of volatility is one of the classic investor mistakes.
It would be great to be able to know exactly when the market will go up and down, but the truth is that no one can predict it consistently. Based on history, it may be best to do nothing during down markets. Continue reading