If you're comfortable with your investments, you might be in trouble
Emerging stock markets have been flat over past six years — risks are commodity rout, China slowing and higher U.S. rates.
Plus, two Vanguard heavyweights disagree on proposed securities transaction tax.
Europe is “turning Japanese, they really think so.”
Unless specified otherwise, all performance and market data are sourced from Bloomberg. For all indices, performance reflects total returns which is change in price plus reinvested dividends and/or interest, if any. MSCI index total returns are shown net of dividend withholding taxes.
With the close of 2009, we can learn a very important lesson about investing. During the last 10 years, from 2000 through 2009, stock returns, as measured by the Standard & Poors 500 Stock Index (S&P 500), have lost 1.1%. Some have called it the " lost decade ." Some are questioning the wisdom of investing in stocks at all. The lesson to be learned from the last 10 years, however, is that we should continue to include stocks in our portfolios, but at the same time, we must ensure that our portfolios are well diversified and periodically rebalanced. In short, the lesson to learn is that diversification does indeed work. It’s always dangerous to draw conclusions about investing from a single time period. The last 10 years included some extraordinary events. We started off in 2000 with the Internet stock craze and bubble followed shortly thereafter by the September 11th terror attack. Low interest rates introduced to counter the ensuing recession helped trigger the real estate crash of 2007 and 2008 and the current economic crisis. It was an extraordinary decade. History tells us there have been 10-year periods in the past with similar poor stock returns relative to fixed income assets. When we meet with clients [...]