Weekly Market RecapThis week saw softness in recent US economic data. The latest estimate of growth for the first 3 months of 2015 came in at +0.2%. This was less than many expected and compares unfavorably with Q4's growth of +2.2%. We see several factors driving this. The primary factor is a stronger dollar hurting US exports in our opinion. The Federal Reserve meeting this week viewed this recent weak US growth as "transitory." Internationally, both Sweden and Thailand took measures to spur their economies. Brazil was forced to raise interest rates, in an attempt to tame high inflation. On average, based on our research, we see a negative year in US markets about every 3-4 years looking back over history. Currently, we haven't seen a negative year in the US for over 6 years. It doesn't imply any fall is coming - in fact, the US is in positive territory so far this year. It's important to remember that, downturns are quite normal, and an integral part of the market's average +6.6% real long-term return. If you've started investing since 2010 or more recently, chances are that you've only experienced relatively good times We will see a bear market again. However, we believe a diversified approach should smooth returns through any market turbulence. DALBAR's analysis of investor behavior comes to an interesting conclusion on this topic. They find that the average investor has lagged the broader market by over 4% a year, on average, over two decades. Much of the underperformance comes, perhaps surprisingly, during some of the worst months for stocks. During weak markets, investors can move from stocks to cash and miss out on the subsequent market rebound. It's important to note that these rebounds can occur even within a negative month, sometimes when stocks are generally falling, they can also bounce back quickly and strongly. As the great investor Peter Lynch says "The key to making money in stocks is not to get scared out of them." This insight underpins our approach to portfolio construction and rebalancing. The views expressed herein are not intended to serve as a forecast, a guarantee of future results, investment recommendations or an offer to buy or sell securities by FutureAdvisor. Differences in account size, timing of transactions and market conditions prevailing at the time of investment may lead to different results, and clients may lose money. Past performance is not indicative of future results. Your Portfolio Summary
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Sunday, May 3, 2015
Your Weekly Update - US Q1 Growth Less Than Expected
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