Monthly Archives: February 2016

Financial Fact, February 2016

Did you know that from 1995 to 2014 the average investor received an average annual return of 2.5%? This statistic shows the importance of creating an investment plan and regularly rebalancing. 

Based on an analysis by Dalbar Inc.

Financial Fact 2

 

Source: J.P. Morgan Asset Mangement; Dalbar Inc. Indexes used are as follows: REITS: NAREIT Equity REIT Index, EAFE:MSCI EAFE, Oil: WTI Index, Bonds: Barclays Capital 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 the S&P 500 Index and 40% invested in high quality U.S. fixed income, represented by the Barclays Aggregate Index.  The portfolio is rebalanced annually.  Average asset allocation investor return is based on an analysis by Dalbar Inc., which untilizes 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 12/31/14 to match Dalbar’s most recent analysis.
Guide to the Markets – U.S. Data are as of December 31, 2015.
Past performance is not indicative of future returns. 

What Nick’s Reading | A Must Have Guide to the Financial Market, Stock Returns, and Investment Strategies

Jeremy Siegel’s book, Stocks for the Long Run, provides useful information on stocks.

 

During my senior year at Trinity University, I joined the Student Managed Fund. Among the stock analysis, market tracking, and valuation debates, my professor assigned some reading that helped solidify my convictions in regard to the market. One of the instrumental texts included in the curriculum was Jeremy Siegel’s book, “Stocks for the Long Run.”

 

Siegel, a professor of finance at the Wharton School of the University of Pennsylvania, uses historical data and statistical analysis to make two compelling arguments:

 

1) Siegel demonstrates clearly how long-term stock returns regress to a mean, despite high short-term volatility. Ultimately, real stock returns are far and above the foremost investment over the long run.

 

2) Siegel further concludes equities to be essential in a retirement portfolio as the only sure vehicle that keeps up with inflation over decades.

 

In volatile markets, as fears are on the rise and the media is in a frenzy, I often find myself referring back to this pivotal text to gain perspective. Take a look into the book for more useful information on stocks.

Click here to find Stocks for the Long Run on Amazon.

Willis Johnson & Associates is a registered investment advisor. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. Past performance is not a guarantee of future results. Investors should be aware that it is not possible to accurately predict all of the changes that may occur in the economy or the stock market.


nickNick Johnson, CFA®, CFP®

 

Nick Johnson believes that financial planning is more than numbers on a balance sheet and a standardized process. People are unique and should be treated as such.

 

As Vice President and a Wealth Manager at Willis Johnson & Associates, his goal is to really get to know his clients, all the while providing a proactive approach to comprehensive wealth management.


 

The Markets (as of market close January 29, 2016)

The start of 2016 for the equities markets may be described as rocky at best. Stunted by receding oil prices and a plummeting Chinese stock market, January began with stocks hitting the skids in a big way. A late-month rally fueled by an about-face in oil prices, some favorable earnings reports, the prospect of further stimulus from the European Central Bank, and Japan dropping interest rates to negative numbers spurred stocks higher toward the end of the month, but not enough to lift each of the indexes listed here out of negative territory year-to-date. The Russell 2000 and Nasdaq still have the most ground to make up to get to even, while the large-cap Dow and S&P 500 are about 5.0% off their values at the end of 2015.

Click for the Full Update

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