By Brian Sottak, CFA, CFP®, CAIA
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. But while 2017 was largely categorized by low volatility and muted headlines, 2018 has seen an increase in volatility (still well below historical norms) and a meaningful increase in market-moving headlines that can often lead investors to make irrational decisions.
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”.
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.