This Time Is Different

January 2016. October 1987. 2008. 2001-2003. For those who remember, 1973-1974.

What do those dates have in common? Those are all times in the “recent” (everything is relative depending on your age) past that bring terror to our hearts. They are all times in which the markets spun in irrational and uncontrollable ways, teasing us and taunting us, showing us who’s really the boss. No matter what anyone says, it’s not possible to legally time the market and come out ahead. Of course, there are some times when a money manager or analyst will “get it right.” But even a stopped clock is right twice a day.

It’s rare to see the same analyst/money manager get it right twice.

Our emotions take us away on roller coaster rides that don’t end … until we least expect it. The greatest challenge with trying to time the market (moving in and out of the market at presumably highs and lows) is that we don’t know until we’re looking back where those highs and lows are.
We have created well-diversified portfolios for you that we believe will outperform the relevant benchmarks (indices) over long periods of time. We rebalance your portfolios as opportunities are available. We have to recognize that in order to benefit in the up-markets, we must tolerate and ride through the challenging times. The times that make us doubt the long-term historical performance of the markets.

1973-1974. October 1987. 2008. 2001-2003. And now, January 2016.

Is it over?

Is it different this time?

If you weren’t aware, these first few weeks in January have been the worst start to a year for the DOW® since 1897. That’s 122 years. Historically, the ten worst quarters in the DOW have been followed by the ten best quarters in the DOW.

Last year (2015) was one of the most difficult years to make money in the last 78 years.
According to data from Societe Generale, the best-performing asset class of 2015 was stocks, whose meager 2 percent total return (that is, including dividends) still surpasses those of long-term bonds, short-term Treasury bills, and commodities. These minimal gains make 2015 the worst year for finding returns since 1937, when the cash-like 3-month Treasury bill beat out other major asset classes with a return of 0.3 percent.1 (Please see the footnote below for the link to the article.)
The market does not move predictably. You are well-diversified in your portfolio, however, in these markets, just about all assets classes are down and not showing any mercy as yet. We believe that when we look back from 2026, this may very well be a great buying opportunity. Just like March 2009, November 1987, 2003, and December 1974 when the DOW closed down 27.57% at 616.24.2 Even at year-end 2008, the DOW was 8776.39.3 The DOW, even after the 7% correction, is now at 16,346.04. (As of this writing.)

We care deeply about your investment performance. We have a strategy that we believe will work, but we have to have patience in this market. After 38 years in this industry, I believe our investment strategy is stronger than ever. I have confidence that the strategy will carry us through.

Let’s keep things in perspective. Turn off your televisions and XM Radios and take a walk.

Please feel free to call us. We look forward to hearing from you.

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