Market Review

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2021 Annual Market Review

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2021 could be considered a strange year in the world of investing because it presented some new and/or unusual considerations for investors. The US stock market was up over 25% while the US bond market was negative for the year (a relatively rare occurrence!) Meanwhile, investors laid witness to the meme stock sensations (hello, GameStop); the volatility of Bitcoin and other cryptocurrencies; the broader introduction of NFTs (non-fungible tokens); and much, much more. The impact of global supply chain issues along with the continued pandemic furthered uncertainty for investors.

However, as is most often the case, those with a well-defined and diversified strategy were well served. They were able to tune out the noise, remain focused on their objectives, and stay committed to long-term success.

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Market Review - Q3 2021

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Review the quarterly market summary with performance data, global headlines, and commentary on indexing.

“Flexibility is one of the key differences between index investing and Dimensional Investing and where so much of our innovation has taken place. Because we weren’t beholden to tracking any particular index, we could harness the power of markets, even beat the indices. The protocols, systems, and teams we’ve developed—as well as the experience we’ve accumulated—have shown to be applicable to a wide range of strategies, from fixed income to value to international investing.“

Market Review - Q2 2021

Review the quarterly market summary with performance data, global headlines, and a conversation about inflation.

With the economy starting to recover from the COVID-19 pandemic and investor concerns turning increasingly toward inflation, Dimensional Founder David Booth talked with Nobel laureate Eugene Fama about inflation and how investors should think about it in their portfolios. Excerpts from their conversation have been edited for clarity.

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Market Review - Q3 2020

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Logic and data provide the basis for a positive expected value premium, offering a guide for investors targeting higher potential returns. There is pervasive historical evidence of value stocks outperforming growth stocks. Recently, growth stocks have enjoyed a run of outperformance vs. their value counterparts. But while disappointing periods emerge from time to time, the principle that lower relative prices lead to higher expected returns remains the same.

We believe investors are best served by making decisions based on sound economic principles supported by a preponderance of evidence. Value investing is based on the premise that paying less for a set of future cash flows is associated with a higher expected return.

Market Review - Q2 2020

With activity in many industries sharply curtailed in an effort to reduce the chances of spreading the coronavirus, some economists say a recession is inevitable, if one hasn’t already begun.

From a markets perspective, we have already experienced a drop in stocks, as prices have likely incorporated the growing chance of recession. Investors may be tempted to abandon equities and go to cash because of perceptions of recessions and their impact. But across the two years that follow a recession’s onset, equities have a history of positive performance.

Recessions understandably trigger worries over how markets might perform. But history can be a comfort for investors wondering whether now may be the time to move out of stocks.

2019 Annual Market Review

Equity markets around the globe posted positive returns in 2019. Looking at broad market indices, the US outperformed non-US developed and emerging markets for the year.  (Though that doesn’t mean countries like Greece and Switzerland didn’t outperform the US, individually.)

Interest rates generally decreased in the US Treasury market and global markets during 2019. In terms of total returns, short-term corporate bonds gained 6.99%. Intermediate corporate bonds had a total return of 10.14%.

Market Review - Q3 2019

“Timing markets is the dream of everybody. Suppose I could verify that I’m a .700 hitter in calling market turns. That’s pretty good; you’d hire me right away. But to be a good market timer, you’ve got to do it twice. What if the chances of me getting it right were independent each time? They’re not. But if they were, that’s 0.7 times 0.7. That’s less than 50-50. So, market timing is horribly difficult to do.”