A friend of mine tells about a former colleague, a stockbroker, who was famous around the office for his frequent, dire financial predictions. “He successfully predicted five of the last two bear markets,” my friend remarked.
Given recent headlines about indices like the Dow Jones Industrial Average and the S&P 500 Index hitting all-time highs, I thought I would share a piece I received this month from Dimensional Fund Advisors (Dimensional).
“What goes up must come down. Spinning wheel got to go round.”
This year’s market calls to mind those classic lyrics from the group Blood, Sweat, and Tears — all things that have clearly been shed in 2016!
Peter Lynch ran the Fidelity Magellan Fund for 13 years, during which time Magellan was the number one general equity fund in America. Lynch’s books One Up on Wall Street and Beating the Street offer up the active manager’s accumulated wisdom.
They say a picture is worth a thousand words. In this case, I’d argue that your financial future rides on appreciating the following two drawings by author and Behavior Gap founder Carl Richards. The first illustration illustrates how may investors behave in a volatile market.
It has been well documented that during the Global Financial Crisis (GFC), many individual investors panicked, sold the bulk of their investments and sat in cash waiting to get back into the market. If you asked them, they would tell you they were looking for a “safe” time to get back into the market.
In A Visual History of Market Crash Predictions, Michael Johnston asks that “when wading through the predictions of financial doom and gloom,” that we keep one thing in mi
Investors trade more than they used to. Often these buy and sell decisions are emotional responses to market volatility — an attempt to limit losses in choppy markets. We believe an investor should rarely, if ever, make adjustments to their portfolio based upon an emotional response to the market.
What if you could invest in what you knew would be the highest performing asset class of the year?
Talk about a rollercoaster. Stock prices in markets around the world fluctuated dramatically for the week ended August 27. On Monday, August 24, the Dow Jones Industrial Average fell 1,089 points–a larger loss than the “Flash Crash” in May 2010–before rallying to close down “just” 588 points.