2014: Patience Pays Off

Forecasters often cite a figure of 8% to 10% as a likely outcome for stock market performance in the year ahead, and 2014 was no exception. As sensible as this may sound, it is worth pointing out that over the past 89 years, the S&P 500 Index and its predecessors have never delivered a total return between 8% and 10% […]

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Hindsight Bias: Don’t Look Back

How often do you look back at something and believe that you could have predicted it, or that the event seemed so obvious only after it has actually happened? If you fall into this line of thinking, you may display what is known in psychology as hindsight bias, a potential decision making killer. Perhaps the most common occurrences of hindsight […]

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The Case for Owning International Stocks in 2015

I’ve had a few questions from my clients about why we own international stocks when they are underperforming U.S. stocks.  For those clients who started in 2008 or later, you probably do not remember the time when international stock returns were much higher than U.S. stock returns.   I have included a chart from our January 2008 quarterly letter that shows how different international returns were […]

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Client Letter – Q4 2014

During the past year, the best performing asset classes were REITs (real estate) and U.S. large stocks. International stocks were all down between -1% and -7%. The following chart shows the 1-year, 5-year, and 10-year performance of many DFA funds (representing different asset classes) compared to the S&P 500 Index: Market Returns for the period ending December 31, 2014 DFA Fund […]

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