“Economic Laws Cannot Be Depended Upon If We Disregard Psychology…”

Through September of this year, most of us were comfortable, as our portfolios were producing a positive rate of return. How quickly that changed as those positive returns rapidly turned into losses. Declines impacted investors around the world. Let’s take a look at the annual returns for a few major world stock markets as provided by Jill Mislinski of Advisor Perspectives for 2018:

Index

2018 Price Return

BSE SENSEX (India)

+6.67%

S&P 500 (United States)

-6.24%

CAC 40 (France)

-9.62%

Nikkei 225 (Japan)

-12.08%

FTSE 100 (United Kingdom)

-12.48%

Hang Seng (Hong Kong)

-13.61%

DAXK (Germany)

-20.57%

Shanghai (China)

-24.59%

Dshort.com

Granted, most of us will never have a portfolio that is 100% invested in common stocks.  Nor would we own multiple index funds from around the world.  Even a conservative investor who limits the amount of funds invested in common stocks had a hard time making any money in the past twelve months.  Let’s look at the average returns provided by mutual funds that allocate money across various types of asset classes, the most common of which are stocks, bonds, and cash and or cash equivalents.  These results are the simple average of allocation mutual funds that report results to Morningstar as of December 31, 2018:

Allocation Fund Category

Last Three Months

2018 Total Return

Allocation 15% to 30% Equity

-3.23%

-3.14%

Allocation 30% to 50% Equity

-5.97%

-5.04%

Allocation 50% to 70% Equity

-8.66%

-5.79%

Allocation 70% to 85% Equity

-11.43%

-7.92%

World Allocation

-8.08%

-8.26%

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Disclosure: Anderson Griggs & Company, Inc., doing business as Anderson Griggs Investments, is a registered investment adviser.  Anderson Griggs only conducts business in states and ...

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Gary Anderson 10 months ago Contributor's comment

Nice pep talk. Key is how open we are going forward. Certainly Ahlsten was astute to point out that we still have immigration. But Trump is becoming an isolationist in many ways, including even legal immigration. The method of US success appears to be turned on its head by POTUS, so will we recover from it?