2016 was a rollercoaster ride for equity investors. Despite the volatility, and a few white knuckle moments, last year ended up being an excellent one for investors who maintained a long-term perspective. Not only did the S&P 500 recover from the worst start in U.S. stock market history, but CCM clients also captured additional returns from the outperformance of small company stocks and value stocks. In this recommended reading article, Paul Merriman recaps that outperformance and highlights ... [Continue Reading]
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“When markets hit new highs, is that an indication that it’s time for investors to cash out?” This is the question asked by the research team at Dimensional in their new white paper "New Market Highs and Positive Expected Returns." With new all-time market highs being reached earlier this month, and the psychological watermark of 20,000 on the Dow Jones industrial average close to being broken, it seems perfectly logical to wonder if future returns might be lower or if a correction should be ... [Continue Reading]
This week’s recommended reading comes with an experiment. Find a coin and flip it until it lands on heads three times in a row. Go ahead, we’ll wait. It’s not easy to do. Everyone will have a different experience, but if we conducted this experiment with a large crowd we’d find that most people would require eight attempts before succeeding. We know this because the probability of flipping a coin and it landing on heads is 50%, and if we repeat that probability three times, we find that ... [Continue Reading]
The economic policies being proposed by President -Elect Trump are not what we would traditionally expect from a Republican heading to the White House. Mr. Trump’s proposals, if enacted, would rely on increased borrowing to fund economic expansion, most notably on infrastructure and defense spending. Markets have quickly priced in the rising probability of this type of deficit spending by adjusting expectations for future growth in GDP and inflation. As such, bond prices have fallen and interest ... [Continue Reading]
As election results started to pour in on Tuesday night, the surprise outcome of a Donald Trump victory rippled throughout international markets. U.S. stock futures fell more than 5% as the uncertainty of what was happening led to a risk-off trading environment. By noon on Wednesday, not only had markets completely recovered from those losses, but they were well on their way to strong gains. While there are many uncertainties about our future, and questions to be answered regarding what type ... [Continue Reading]