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The Sky Isn’t Falling

January 9, 2019

From an emotional perspective, steep market declines are difficult to deal with, as we tend to feel the pain of a loss twice as much as we feel the joy from an equal-sized gain (the ratio increases with the size of the investment). Read More...

Investing for the Long Term amid Stock Market Volatility

January 7, 2019

From March 2009 through September 2018 — a period encompassing almost 10 years and the aftermath of the Great Financial Crisis — the world’s stock markets performed exceedingly well. Over this period, the global stock market was up 14.3 percent per year while the S&P 500 was up 17.9 percent per year. This means that $1 invested in global stocks grew to $3.60 while $1 invested in the S&P 500 became worth $4.84. Other than the first few years of this period, stock market volatility was also well below its long-term average. This changed swiftly in 2018’s fourth quarter, with global stocks down 12.7 percent and the S&P 500 down 13.5 percent. These bleak returns came with a corresponding uptick in volatility; the quarter saw numerous days with stocks either rising or falling by 2 percent or more. Read More...