Independent Investment Management and Financial Planning
I’ve provided you with performance of various asset classes around the world for both the third quarter and year-to-date to give you a sense of how global markets are performing. I’ve sorted the list by Year-To-Date returns going from lowest to highest.
What do you notice? Continue reading “Quarterly Market Update: Diversification Bites”
I came across an interesting analysis in Dr. John Hussman’s recent commentary that I’d like to briefly share.
In the commentary he talks about the primary driver of market returns throughout the various cycles since 1982. It’s very important to understand this if you want to understand the potential return outcomes for the duration of the market cycle…emphasis mine Continue reading “Drivers of Return Since 1982 and What That Means for the Market Over The Next 10 Years”
They say to “buy and hold,” but is that really the best approach? I don’t believe it is for many people. Let me explain why…
Below is a fantastic chart from Michael Lebowitz. The chart shows how long it took an investor to regain their purchasing power after major U.S. stock market peaks going back to 1900.
The time-frames to breakeven (net of inflation) have ranged from 14 to 29 years with an average of about 22 years! Think about that for a moment. Twenty-nine years is about as long as most people’s entire retirement!
Continue reading “Over 22 Years To Get Your Money Back?”
In my Q1 market review, I mentioned that both U.S. bonds and stocks were down together for the quarter, and that was a relatively rare occurrence. I mentioned that only happened 8 other times in the previous 30 years. This was concerning for a few clients.
The primary reason it was concerning for some clients is that I generally have portfolios positioned more conservatively than I would in a more “neutral” environment. In other words, I have a targeted range to which I am bound for each client and am currently positioned on the conservative end of that range for most clients. The reason for the relatively conservative positioning is that I am concerned about stock market valuations (i.e. stocks are about as, or more, expensive as they were in 1929 and 2000…depending on the metric).
So when both bonds and stocks decline together it makes folks nervous. After all, isn’t the idea that bonds will hold up when stocks are declining? To add insult to injury, bonds actually declined MORE than stocks in the first quarter. As a result, several clients asked me, “Why did that happen?” “Will it continue?” “Is this still the right strategy?” Continue reading “Question I Was Asked In Several Quarterly Client Meetings”
My expectation for losses in U.S. stocks during the next bear market is over 60%, which would take us back about twenty years and would require at least a 150% gain just to get back to even.
What impact would such a loss have on your portfolio? What impact would that have on your ability to retire or sustain your retirement lifestyle? Would any other financial goals be impacted? How about the toll on your mental health to see such a large chunk of your life savings wiped out. Continue reading “Are You Prepared for the Next Bear Market?”