It’s only natural for someone invested in a poorly performing active equity mutual fund to wonder if it’s time to make a change. Should an investor sell a fund if it trails its benchmark for a year? Three years? Five years?
Investment time horizon is a critical concept in building wealth. Most investors have very long investment time horizons, typically decades or more.
We are experiencing a new peak in the rhetoric around trade, geo-politics, the economy and the business cycle. We have also seen increased market volatility.
“Now’s not a good time to invest,” or “I’m waiting for the right conditions” are familiar refrains we hear from investors and advisors alike. Fortunately for long-term investors who don’t take regular withdrawals from their portfolios, the sequence of returns doesn’t affect the ultimate investment outcome.
Investors, economists and the media spend an enormous amount of time and energy trying to forecast the economy. The idea is that forecasting economic growth will give us an idea of where the stock market is headed. Surprisingly, no predictive relationship exists between current economic conditions and the current stock market.
With the recent market decline, increased volatility and the deafening media noise, it can be easy to lose track of the basics. Remember, recent activity doesn’t tell us much about market returns.
The surging US economy and stock market have left international markets behind, with the S&P 500 Index beating the MSCI EAFE Index1 by 7.1% per year for 11 years. But US equities don’t always outperform the rest of the world, and the potential of international equity returns shouldn’t be overlooked.
Even though we all know market fluctuations are a normal part of equity investing, large market declines are scary to most investors because they often happen rapidly and feel random.
Recessions are usually triggered by events that are largely unpredictable in advance. A careful review of the evidence shows that the onset of the next recession cannot be predicted by how long the current expansion has lasted.
The behavioral wealth advisor takes a holistic and proactive approach to wealth management, creating a behavioral discipline throughout the client service model. They increase client confidence and minimize behavioral biases while improving retention and acquisition.
How does a proven tactical strategy work when the market signal is driven by behavioral crowds? In this interview, C. Thomas Howard, PhD of AthenaInvest reveals how their global tactical portfolio outperforms with a unique behavioral approach.