Global equities had mixed performance in the third quarter with large U.S. stocks inching higher and small U.S. stocks falling 2.4%. Foreign stocks struggled in the face of trade negotiations and ongoing tariff disputes. Real estate was a strong performing asset class, rising nearly 6% as interest rates declined, reducing financing costs. As has been the case for much of the year, political headlines remained prominent in the U.S. news cycle as the 2020 presidential election looms on the horizon and an impeachment inquiry got underway.
For over 28 years, Dowling & Yahnke has invested client assets as fiduciaries. Our firm is independent with respect to the investment vehicles we use, freeing us to design portfolios we believe will best meet client objectives. We continuously scrutinize our investment philosophy and the tools we use, challenging our thinking and experience to ensure our clients receive the best experience possible based on their financial objectives, risk appetite, and tax situation. In this quarter’s newsletter, we will explore our longstanding relationship with Dimensional Fund Advisors (DFA). While DFA mutual funds represent a minority portion of the assets we use in building portfolios, many of the philosophical and practical concepts underpinning DFA’s approach also permeate our thinking.
The Uncommon Average
“I have found that the importance of having an investment philosophy—one that is robust and that you can stick with— cannot be overstated.”
Investment fads are nothing new. When selecting strategies for their portfolios, investors are often tempted to seek out the latest and greatest investment opportunities.
Elevated stock market volatility, as we have seen the past two months, brings gloomy headlines and may elicit fear in some investors. Since the beginning of October, the U.S. stock market (Russell 3000 Total Return Index) has gone from being up nearly 11% for the year to up just 2% as of December 6th. Most of this decline has happened during a few sizeable down days in the market, which can be alarming. It is an impossible task to identify and quantify the specific causes of any market decline, but there are a few leading candidates this time:
Costs matter. Whether you’re buying a car or selecting an investment strategy, the costs you expect to pay are likely to be an important factor in making any major financial decision.
Combining an enduring investment philosophy with a simple formula that helps maintain investment discipline can increase the odds of having a positive financial experience.
Embarking on a financial plan is like sailing around the world. The voyage won’t always go to plan, and there’ll be rough seas. But the odds of reaching your destination increase greatly if you are prepared, flexible, patient, and well-advised.
Bitcoin and other cryptocurrencies are receiving intense media coverage, prompting many investors to wonder whether these new types of electronic money deserve a place in their portfolios.
Let’s start with the basics of this Bitcoin spectacle because the intricacies of Bitcoin production, valuation, and exchange are very difficult to comprehend.