ACTION POINT
EXTEND YOUR INVESTMENT TIME HORIZON
EXTEND YOUR INVESTMENT TIME HORIZON
PROBABILITY OF A LOSS FOR THE S&P 500
(Rolling Price Returns, Jan 1930 – Jan 2021)
- 1 day investment = 46% chance of loss
- 1 year investment = 31% chance of loss
- 5 year investment = 19% chance of loss
- 10 year investment = 10% chance of loss
Source: Richard Bernstein Advisors “Insights” March 2021
MAKE SURE YOU ARE INVESTED IN SOME BENEFICIARIES OF AN ACCELERATING ECONOMY
MAKE SURE YOU ARE INVESTED IN SOME BENEFICIARIES OF AN ACCELERATING ECONOMY
Laggards of last decade coming to life
- Value stocks should outperform growth
- Small-caps should outpace large companies
- International stocks, particularly in emerging markets should lead domestic
READ AGAINST THE GODS: THE REMARKABLE STORY OF RISK
READ AGAINST THE GODS: THE REMARKABLE STORY OF RISK
AVOID MARKET TIMING
AVOID MARKET TIMING
- Historical evidence shows market timing leads to significantly lower returns than buy and hold strategy
- Market timing also leads to increased volatility
- “…the volatility of investor returns is higher than the corresponding volatility in nearly all specifications.”
- “Specifications’’ considered: individual stocks, stock mutual funds and stock indexes in U.S. and major international markets
- Increase in volatility with trading is significant: 10-75% higher.
Source: “The Volatility of Stock Investor Returns” Ilia D. Dichev, Emory University, Xin Zheng, University of British Columbia
TAKE SOME RISK OFF THE TABLE
TAKE SOME RISK OFF THE TABLE
- Market Conditions Flashing Caution
- Winning By Losing Less: A Tried And True Approach
- Trim Some Of Your Most Elevated Holdings
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