The global markets have experienced a tale of two worlds when comparing 2017 to 2018 in certain respects. Both 2017 and 2018 have shared the same positive fundamental commonalities that drive the markets such as: strong earnings, tax reform benefits, and the overall synchronized global growth.
It is important to look beyond these headlines, tune out the noise, practice discipline, and take a long-term perspective.
The chart below is based on a study that estimates that over the last 20 years the “average investor” has achieved only a 2.6% annualized return as compared to more than a 6.4% annualized return for an investor in a 60/40 stock/bond portfolio. This is largely because of poorly-timed (and often emotionally-driven) investment decisions. The stock market has ups and downs – it always has and it always will – but if you’re invested for the long-run, and exercise patience, your portfolio will continue to take business cycles in stride outperforming the “average investor”.
Indices used are as follows: REITS: NAREIT Equity REIT Index, EAFE: MSCI EAFE, Oil: WTI Index, Bonds: Bloomberg Barclays U.S. Aggregate Index, Homes: median sale price of existing single-family homes, Gold: USD/troy oz., Inflation: CPI. 60/40: A balanced portfolio with 60% invested in S&P 500 Index and 40% invested in high-quality U.S. fixed income, represented by the Bloomberg Barclays U.S. Aggregate Index. The portfolio is rebalanced annually. Average asset allocation investor return is based on an analysis by Dalbar Inc., which utilizes the net of aggregate mutual fund sales, redemptions and exchanges each month as a measure of investor behavior. Returns are annualized (and total return where applicable) and represent the 20-year period ending 12/31/17 to match Dalbar’s most recent analysis. Guide to the Markets – U.S. Data are as of June 30, 2018.
At Mission Wealth we believe our client portfolios are well positioned to navigate the upcoming time period by following a strategic, long-term approach to investing, and building globally diversified portfolios that could benefit from continued global growth.
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Mission Wealth is a Registered Investment Adviser. This commentary reflects the personal opinions, viewpoints, and analyses of the Mission Wealth employees providing such comments. It should not be regarded as a description of advisory services provided by Mission Wealth or performance returns of any Mission Wealth client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Mission Wealth manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
