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February FourThoughts Thumbnail

February FourThoughts

  1. One way we learn is through visual effects. When it comes to understanding selected economic developments, using graphics or pictures to paint the story can be very impactful. This graphic  from Visual Capitalist (and the Capital Group) presents the frequency and depth of recessions and expansions over the past 70-years in an easy-to-understand way. This puts some perspective into the current expansion in the US when you look out over several decades.
  2. As a regular reader of Ben Carlson’s material, I try to be selective when sharing his insights. This piece  is a recap of asset class returns over the past 20-years. His commentary is pithy and timely. And it doesn’t take a whole lot of time to digest. 
  3. 2019 will certainly go down as an extraordinary year in terms of equity market returns. From the day after Christmas 2018 to early this year, the advance of the S&P 500 Index could be regarded as happening only once in a great while. A reasonable conclusion is that 2020 will likely not look anything like 2019 in terms of market returns. But let’s take this a step further and use recent market history as a guide. Since 1980, the average annual drawdown of the S&P 500 Index has been 13.8% - with annual returns positive 75% of the time. The average annual return of the S&P 500 Index from then to the end of 2019 was north of 10% per year with dividends reinvested. From this I offer a few conclusions: a) corrections are very common, b) neither I nor anyone else can forecast much less time them, and c) this is irrelevant to our long-term investment philosophy which is goals-focused and planning-driven. 

 FourThoughts – Jim Butler, CFP®, AIF®

FourFront Advisors, LLC

Feb 20, 2020


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