Portfolio Advisors Blog

Once again, an important lesson has been reaffirmed.  Those who try to predict short-term market movements do so at their own peril.  The recent presidential election was just one of many such affirmations.  If you were glued to your TV the night of the election, you watched reports of the Dow Futures falling over 800 points, and you probably went to bed thinking that the following day would bring even greater declines.  You would have been wrong.  The market opened having reversed course, and by the end of the day the Dow and the S&P500 were not only positive but closed posting strong gains.    

Since the election, we have seen markets continue to advance and to hit new highs.  Many wonder if the trend will continue.  In the short-run, no one can be certain.  What we do know is that this year markets have confounded nearly everyone.  The year began with the S&P500 falling 9% during the first six weeks of the year, only to rebound and move sharply to the upside.  We then watched a vote in the United Kingdom with an unexpected result.  The reaction to “Brexit” resulted in global market declines the morning after with the S&P 500 suffering a 5.4% decline, its largest single day loss since 2011.  You know the rest of the story.  Within days, the S&P had regained its footing and continued to advance. 

Thank you to our clients who completed our Client Survey earlier this summer.  Portfolio Advisors has existed for some 26 years, and we’ve learned a lot about our clients over that time. However, we’ve also learned that it’s not always so easy to know how our clients see things.  That’s why we ask. 

Several helpful pieces of information came from the survey, and we’d like to share some highlights.  First, if you’ve had a review meeting with us this year, there’s a good chance that we worked with you on developing a more formal financial plan using our software.  Your answers support this effort.  When you were asked how you primarily measure the value received from your advisor, 3 of your top 4 answers are served through the planning process:  sense of security/peace of mind, knowledge of my personal financial situation, and progress toward my goals.  We’ve received positive feedback on our planning process during meetings.  Your answers here further support this effort.

When news breaks and markets move, content-starved media often invite talking heads to muse on the repercussions. Knowing the difference between this speculative opinion and actual facts can help investors stay disciplined during purported "crises." Please click below to read the full article.

History-on-the-Run.pdf

This year's Speaker Forum and Reception will feature Dimensional Funds Vice President Scott Bosworth presenting his topic, "Implications of Investor Behavior." The Forum will be held on October 11th at 5:30 p.m. in the University Business Center at California State University, Fresno. Please see invitation and speaker bio for further details.

Event Invitation.pdf

When news breaks and markets move, content-starved media often invite talking heads to muse on the repercussions. Knowing the difference between this speculative opinion and actual facts can help investors stay disciplined during purported "crises." Click below for full article.

History-on-the-Run.pdf

How much risk one takes is an important part of the financial planning process. While the degree of risk and associated volatility is highly client specific, being able to stick with the plan throughout both the ups and downs of the market is the key to achieving long term rewards. This video helps reinforce the importance of investors sticking with the plan and also helps illustrate the approach that Portfolio Advisors takes toward investing. Click here for video

"Do you ever listen to the news and find yourself thinking that the world has gone to the dogs? The roll call of depressing headlines seems endless. But look beyond what the media calls news, and there also are a lot of things going right." This article, written by Dimensional Funds Vice President Jim Parker, sheds light on some of the things that are going right.

To read more about this subject, click here: Ten_Reasons_to_be_Cheerful.pdf

This short and compelling article reinforces the premise that "Investors can benefit from consistent exposure to both US and non-US equities." It examines "The Lost Decade," a period in which the S&P 500 recorded a total return of -9.1%. The article goes on to point out that while the S&P 500 was negative for this 10 year period, "conditions were more favorable for global equity investors as most equity asset classes outside the US generated positive returns over the course of the decade." By investing in both US and non-US equities, investors are best positioned to capture global market returns.

Please click this link to access the complete article: Why-Should-You-Diversify.pdf

No doubt about it, the year has gotten off to a rocky start as reflected in the January S&P 500 index return of -4.96%. This, the ninth lowest return for the index since 1926, has investors wondering whether these returns have some predictive power for returns throughout the rest of 2016. In looking back over the past 90 years, we see that a negative January was followed by a subsequent 11 month return that was positive 59% of those years, with an average return of 7%. Further, looking at just the 5 lowest January returns (excluding January, 2016), we see that the following 11 months in those years had an average return of 14%.

While we can't predict how markets will react based on the past, we can say that a negative January does not necessarily predict poor market returns for the rest of the year. Further, returns over any period can be positive or negative. As such, we believe that investors should maintain a disciplined approach through all periods in order to capture returns the market offers.

Yes.  While stock market volatility is unsettling, it is also quite normal.  We have provided two graphs that help demonstrate stock market volatility.  The first graph, "US Market Intra-year Gains and Declines vs. Calendar Year Returns," shows both the "highs" and the "lows" for each year from 1979 through 2014.  The black and red bars show the "highs" and "lows" of the market for each year.  The blue bar shows the actual return recorded for the year.  You will note that the calendar year return is often very different from the "highs" and "lows" that occurred during each year, and it is instructive to note that during this 36 year period, positive returns were achieved 83.3% of the time.  For further perspective, you may also view the second graph, "US Large Cap Market Intra-year Gains and Declines vs. Calendar Year Returns."  This graph provides even greater perspective as it looks at the largest US stocks for the period of 1926 through 2014.  During this 89 year period positive returns were achieved 73.3% of the time.  Both graphs provide a visual perspective of just how "normal" yearly market volatility is.  They also provide evidence which shows that investors that have remained disciplined have historically been rewarded for staying in their seats during these periods of unsettling volatility. 

Click below to view each graph.