By most measures, 2013 was the best year since the 1990s. All of the major domestic stock indexes advanced between 29% and 43% for the year. Virtually every U.S. market segment benefited with the exception of real estate and commodities.
The developed foreign markets also performed well as a group, with the EAFE (Europe, Australasia and Far East) index growing by 23% for the year.
In looking back at 2013, how many individual or professional investors would have, on January 1 of last year, predicted this outstanding market? Fiscal cliffs, high unemployment, an anemic economic recovery, near-zero interest rates, government shutdowns, extraordinary government debt levels, terrorism, unstable foreign governments, Iran … the list is endless. It was easy to be skeptical. Yet, the markets seemed to ignore most everything and confounded many of its investors by roaring ahead throughout the year.
At Jentner Wealth Management, we feel that 2013 merely reinforced various fundamentals we have shared with you for years. Future market results are unknowable. Reacting emotionally to news events or market predictions often leads to disappointment.
We all have concerns about the things that seem to matter around us. However, these expectations and uncertainties are already built into the market. Because we don’t know what will happen next, we diversify.
Think about this: If the gurus who regularly appear on financial television or in the newspaper really had a crystal-clear view of the future, why would they bother sharing it with the world? It just makes more sense to focus on what’s in your own control: Invest something out of every paycheck, diversify globally and stay disciplined.
As we embark on a new year, the Jentner Team thanks you for your trust and confidence, which we always strive to earn. May 2014 bring health, happiness and success to you and yours.
For more insight, listen to Jentner Wealth Management’s weekly podcast by clicking here. Or download Jentner’s newest white papers on The Four Cornerstones of Prudent Investing and The Active Versus Passive Investing Debate.