News Flash! Stocks are volatile! (Just in case you didn’t know that before). While most people think about volatility in the context of losses or downside, stocks are volatile in periods of gains as well. The broad US stock market was UP about 10% for the MONTH of April (simplistically speaking, over 120% on an annualized basis, but don’t expect that) but even that gain left the broad US stock market with a 2% to 3% loss year to date.
The good news is that US Large Company stocks were the worst relative performers in April, so our diversified multi-asset class strategy worked well in April, as it had also done in March. Many asset classes were up 15% to 20% in April alone and 20% to 35% for the two months of March and April.
Investors are still wincing at the 30%+ market losses of 2008, but if markets are so volatile shouldn’t we have some years of 30%+ gains? The answer is a resounding YES! Over the 83 calendar years from 1926 to 2008, there were 18 calendar years where US large company stocks went up over 30%. This compares to only 3 years with losses greater than 30% and only 6 years when losses were greater than 15%. Over that 83 year period, there have been only 5 years outside of the 95% probability range; two years with returns greater than 52% and three years (including 2008) with losses greater than 33%.
Just a quick report that Morningstar ranked Ohio’s 529 Plan as one of the top 5 college savings plans in the country. Now if only the Cincinnati Reds could be so highly ranked!
Here are a couple of less exciting items. If you are receiving a pension and having income tax withheld based on the tax withholding tables, you may need to increase your withholding to account for an $800 adjustment caused by the new payroll tax credit for workers, which does not apply to retirees. Contact us for a review, if applicable.
Lastly, both Dimensional Fund Advisors (DFA) and Vanguard are sending shareholders proxy voting materials. Please vote promptly to minimize the funds expenses since higher expenses mean a lower net return for you! Contact us if you need assistance.
As always, your trust and confidence are important to us and we appreciate the opportunity to serve you! Please contact us with any questions you have.
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