|Pathways Advisory Group, Inc.|
Evon Mendrin, CFP®
In the blink of an eye, we’re already three months into 2019! Before we go too far into the year, we’d like to take one last peek at 2018. The year was full to the brim of drama – politics, the Fed Reserve, Inflation, Brexit, Kardashians, and plenty more. It was quite the year. With the help of Dimensional Fund Advisor’s 2018 Market Review, let’s look back at a couple of the takeaways.
1) Market Declines Don’t Always Spell Doom and Gloom
2) Diversification Continues to (and always will be) Important
Conclusion2018 included numerous examples of the difficulty of predicting the performance of markets, the importance of diversification, and the need to maintain discipline if we as investors want to effectively pursue the long-term returns of the businesses of the world.
It’s not always pleasant and sometimes downright terrifying. However, history shows us that – through Great Depression, Great Recession, World Wars, military conflicts, oil panics, and so on – stock markets reward long-term, patient, discipline investors that stay the course.
1. Declines are defined as points in time, measured monthly, when the market’s return since the prior market maximum has declined by at least 10%. Declines after December 2017 are not included, but subsequent 12-month returns can include 2018 returns. Compound returns are computed for the 12 months after each decline observed and averaged across all declines for the cutoff. US markets (1926–2018) are represented by the S&P 500 and Developed ex US markets (1970–2018) are represented by the MSCI World ex USA Index.