Global equity markets declined in October with a ‐1.89% aggregate return. Emerging markets (+0.12%) outperformed Developed (ex US) markets (‐2.05%) and US markets (‐2.20%).
In the US, large cap (‐1.64%) outperformed mid cap (‐2.86%) and small cap (‐4.83%). Among price‐to‐book asset classes, value (‐1.02%) beat growth (‐2.60%) and neutral (‐2.89%). Financials (+1.67%) posted the largest return and made the largest contribution. Health Care (‐7.26%) fell the most and was the largest detractor for the month.
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The saying “time heals all wounds” doesn’t tend to apply when we look at investor fears regarding political shifts. It seems no matter how much time passes, investors have a concern that something horrible might happen to the markets and the economy every time there is big political news.
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In a recent article published by the Wall Street Journal Dimensional Fund Advisors (DFA) is highlighted as the fastest-growing major mutual-fund company in the U.S. With the leading minds in Efficient Market Theory at the helm of the ship, DFA has developed a strategy that is both active and passive. Dimensional Fund Advisors is not widely known to the general public because their funds are available exclusively to financial advisors and big institutions.
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Next month, Americans will head to the polls to elect the next president of the United States.
While the outcome is unknown, one thing is for certain: There will be a steady stream of opinions from pundits and prognosticators about how the election will impact the stock market. As we explain below, investors would be well‑served to avoid the temptation to make significant changes to a long‑term investment plan based upon these sorts of predictions.
SHORT-TERM TRADING AND PRESIDENTIAL ELECTION RESULTS
Trying to outguess the market is often a losing game. Current market prices offer an up-to-the-minute snapshot of the aggregate expectations of market participants. This includes expectations about the outcome and impact of elections. While unanticipated future events—surprises relative to those expectations—may trigger price changes in the future, the nature of these surprises cannot be known by investors today. As a result, it is difficult, if not impossible, to systematically benefit from trying to identify mispriced securities. This suggests it is unlikely that investors can gain an edge by attempting to predict what will happen to the stock market after a presidential election.
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