Monthly Archives

April 2015

A Changing of the Guard 

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The first quarter of 2015 proved to be one where the benefits of a diversified portfolio flexed its considerable muscle. Following 2014, where many asset classes trailed the U.S. Large Cap stock market, the first quarter of 2015 showed a change in leadership (according to return) among asset classes. The Standard & Poor’s 500 Index, the darling of many return-chasing investors, increased just 0.95 percent in the first quarter, disappointing when compared to other stock indexes that performed significantly better (see chart below). For instance, U.S. Small Caps, as measured by the Russell 2000, were up 4.32 percent, while International Developed Markets as measured by the MSCI EAFE Index were up 4.88 percent. Even bonds outperformed U.S. Large Cap stocks in the first quarter of 2015, posting a positive 1.61 percent return measured by the Barclays U.S. Aggregate Bond Index.

A Changing of the Guard
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Guess Who – The Answer Might Surprise You

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Being a great investor is incredibly hard. Don’t let anyone tell you otherwise. To illustrate this, we took a well-known investment and examined it over two time periods against the Standard and Poor’s 500 Index. The results were fascinating.

Been Down So Long

The chart below extends from 2009 – 2013. The blue line represents the return of the mystery investment (Investment B) and the orange line represents the S&P 500. If you compare the returns over this five year period, Investment B trails significantly. It translates to a cumulative underperformance of approximately 43 percent over the same time period. After watching the investment lose to its benchmark five years in a row, even the most disciplined investors would be tempted to cut their losses and launch this investment from their portfolios! Read More