In our office, we celebrated privately the passing of the four year anniversary of what would be a 13 year stock market low point.
That’s right, it has already been four years since March 9, 2009 when the S&P 500 Index closed at 676—a level last seen in the summer of 1996. As of the date of this article, the S&P 500 Index has surpassed its all-time high of 1565, which was achieved in October 2007!
Even in the face of what many consider sizable headwinds, the markets continued the advance which began in 2009.
How is it even possible for both the stock and bond markets to advance so meaningfully in the face of so much adversity and doom and gloom? Consider the following:
We are often asked about our outlook for the economy and the financial markets from clients, journalist and peers. We generally believe that the investment markets are efficient and accurately reflect all of the information currently available. However, it is important to have an idea of where the economy may be headed. Not necessarily from the standpoint of “timing” the investment markets, but rather from a standpoint of managing return expectations and developing a framework for rebalancing and positioning portfolios.
Will the European Union ever get it together and decide on a plan to save the Euro? Or will the debt-laden nations (specifically Greece, Spain, Portugal and Italy) abandon their attempts at austerity causing further stress on an already weak banking system?
There are a number of indexes that attempt to measure the performance of the financial markets and serve as a gauge of economic activity. The following are descriptions of several of the most common indexes: (more…)
Well, Congress finally enacted the tax reform bill that many have been anticipating for some time. In general, the new law extends the Bush-era tax cuts for two years and provides taxpayers with some certainty during this period. While this comprehensive piece of legislation covers many aspects within the tax code, here is a summary of some of the major points. (more…)
Vanguard has an interactive tool on their website that allows visitors to compare the results when attempting to time the market based on certain investment rules. For example, if you exit the market after a 10% decline and re-enter the market after it appreciates by 5%, how would your results compare to simply owning the market (S&P 500 index) for the entire period? The tool can provide outcomes that span over the last 22 years.
I sampled this tool for quite a while, attempting to effectively “time” the market. I have to admit that I was very surprised by the results. Here is the link to the tool if you would like to give it a try for yourself – The truth about emotion.
The financial markets have experienced continued volatility since the end of April. In fact, with stocks declining in excess of 10%, the markets have officially entered a period of “correction.” Although corrections are normal (and actually healthy for the markets), many investors may be a bit uneasy, especially with the wounds of the “Great Recession” still fresh in everyone’s mind.