The Current Market Aftershock

David Booth, Chairman & Co-CEO of Dimensional Fund Advisors, released a timely video this month about shocks and aftershocks in the market.  He walks viewers through a timeline of US stock market performance in several periods since World War II.  The conclusion is that prevailing market sentiment is often wrong and investors should continue to focus on keeping to their disciplined plan to achieve their long term goals.  Click "Watch Now" below to view.



The Asset Advisory Group
http://www.taaginc.com/

These videos contain the opinions of the participants but not necessarily Dimensional Fund Advisors or DFA Securities LLC, and do not represent a recommendation of any particular security, strategy or investment product. The participants' opinions are subject to change without notice. Information discussed in the videos has been obtained from sources believed to be reliable, but is not guaranteed. These videos are made available for educational purposes only and should not be considered investment advice or an offer of any security for sale. Past performance is not indicative of future results and no representation is made that the stated results will be replicated.

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The Diamondback and Market Emotions

Kings Island recently unveiled its new roller coaster, the Diamondback. Although I have yet to make it to the park for a ride, I did take a virtual spin via their website. It looks like a real stomach-churner, and it reminded me of something else that has been a source of nausea for most of us recently.
–Yes, I’m referring to the markets.

I’m reminded of a chart, The Cycle of Market Emotions. Many of us would agree that this ebb and flow pretty accurately describes the roller coaster of emotions that we have been feeling over the past year. Through my dealings with clients, I find it interesting that we all rest at different stages on the continuum at different times. While one might be feeling desperately panicked and want to sell every share of every fund they own, another could have already crossed this emotional ditch and be optimistically eager to buy shares at a bargain.

It might come as a surprise to some, but one of the most valuable services that we provide to our clients is to save them from themselves. In this age of 24-hour media, breaking news, and every form of talking head financial ‘expert’ on any station, it is easy for one to make a decision out of panic and do permanent damage to their long term investment success. With our guidance and disciplined investment philosophy, we help our clients achieve their goals and avoid these self-destructive behaviors.

It has been said that “the love of money is the root of all evil.” Maybe that’s why the average mutual fund investor doesn’t even come close to realizing the return of the average stock mutual fund.
-Because his emotions got in the way.

By Amanda Bashore