The infamous “gold watch”.
We’ve been working with investors and especially retirees for many years now, and we sometimes joke about how if you retired many years ago you may have received a pension and a “gold watch“. Have you heard of this?
Have any of you actually received a gold watch for retiring? As a confession, we’re not sure that after all these years we’ve ever seen or heard of a client having one of those watches. Maybe once, a while back? If you have, please let us know because we’re beginning to wonder if they actually existed.
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2020 has already had more twists and turns than an HBO special. From the onset of the pandemic and the ensuing economic/financial downturns, to the equally as surprising robust market upturn, to the unknowns over the upcoming election, 2020 is in the record books already.
And we have (understandably) never heard as much concern from clients as we have with the upcoming presidential election.
If that is you, this is a good time to step back, take a deep breath, and ask ourselves two important questions:
Question #1: How much impact does the president have on stocks?
To answer this question, let’s review the evidence. Click on the image below from our friends at DFA, to take a look for yourself at how markets and the economy performed under each president (and also showing who had control of the Senate and House at the time!).
In recent years, U.S. stocks have outperformed international stocks and growth stocks have outperformed value stocks, and this has led many to question the benefits of diversification. We should begin with a look at the appropriate lens through which to view investment strategy performance. Then we will address several issues that work to fog our lens and challenge our ability to stay the course. Taken together, we believe an understanding of these topics fosters the mindset necessary to remain disciplined in the face of adversity.
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