As we review and reflect the events of 2016, my first comment is…wow, what a year. The year 2016 began with what has been termed the worst six
There can be little doubt that the major market imponderable in the last third of the year was the U.S. presidential election. Indeed, the pall of uncertainty was so heavy in the run-up to the voting that the S&P 500 managed to close lower
What May 2017 Bring?
While We believe that the main thrust of our new President-elect is pro-growth, as we commented above, there remain many uncertainties as we begin 2017. While it is clear that our new President-elect wants to accelerate economic growth, but this policy prescription has not always been clear. Will he
At the same time, there are many unknowns around the globe. China’s economic growth has stalled for the second consecutive year, and you will soon be reading about
It is not at all a political or partisan observation but a simple statement of fact that the incoming presidential administration, enjoying solid majorities in both houses of Congress, is likely to pursue more pro-business, pro-capital, pro-growth policies than the other candidate might have. Everything being equal—which it almost never is—we believe these policies should tend to be favorable to the long-term investor.
It will be worth repeating in the context of this year-end letter, the nature of our philosophy of advice. Generally speaking, our experience has been that successful investing is goal-focused and planning driven, while most of that failed
Conclusion and Summary
Another way of making the same point is to tell you that in our experience the really successful investors we’ve known were acting continuously on a plan—tuning out the fads and fears of the moment—while the failing investors we’ve encountered were continually (and randomly) reacting to economic and market “news.”
Most of our clients—and I certainly include you in this generalization—are working on multi-decade and even multigenerational plans, for such great goals as education,
Our essential principles of portfolio management in pursuit of our clients’ most important goals are fourfold. (1) The performance of a portfolio relative to a benchmark is largely irrelevant to financial success. (2) The only benchmark we should care about is the one that indicates whether you are on track to accomplish your financial goals. (3) Risk should be measured as the probability that you won’t achieve your financial goals. And (4) investing should have the exclusive objective of minimizing that risk to the greatest extent practicable.
What we have learned over the past few years is that the markets have ways of surprising us, and that trying to time the market, and get out in anticipation of
Once a client family and we have put a long-term plan in place—and funded it with the investments that seem historically most appropriate—we rarely recommend changing the portfolio beyond its regular annual rebalancing. In brief, our principal is: if your goals haven’t changed, don’t change the portfolio. Our unscientific sense is that the more often people change things, the worse their results become. I agree with Nobel Prize-winning behavioral economist Daniel Kahneman, when he said, “All of us would be better investors if we just made fewer decisions.”
Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss. No strategy assures a profit or protects against loss.
The following sources were used in this report compilation: Nick Murray Interactive, Morningstar, S&P 500 Index, Bob Veres Inside Information, market watch, Forbes.com and The World.com