One of the focal points following the presidential election is the potential for an increase in tariffs applied to goods produced outside the US. Many investors have wondered what this could mean for markets.
One period offering perspective on this issue is President Trump’s first term in office. Beginning in 2017, the administration eyed China as a target and, by 2018, began imposing tariffs across a range of products. The next couple of years saw back and forth trade discussions that eventually led to an agreement, though pre-existing tariffs remained in place. Despite all this uncertainty, both China and the US posted higher cumulative returns than the MSCI World ex USA Index over the four years of Trump’s term.
Markets are forward-looking, and the economic impact from initiatives such as tariffs is likely already reflected in current market prices. When these expected developments come to pass, the effect on markets may be muted.
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Every January, many of us commit to resolutions like eating healthier or exercising more, but a lot of us fall short of sticking to them—because lifestyle change is hard. Improving success in most areas of life demands increased effort and action. But investing is different in a way many of us have a hard time accepting: Doing less often means ending up with more.
A key to successful investing lies in working smarter, not harder. Putting your money to work doesn’t require constantly chasing the next hot stock or trying to outguess the market. Instead, it’s about adopting a thoughtful approach rooted in scientific evidence and long-term discipline. By embracing simplicity and focusing on what really matters, you can increase your chances of success while reducing daily stress and unnecessary complexity. Here are three ways to do that:
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This report features world capital market performance and a timeline of events for the past quarter. It features a global overview and the returns of stock and bond asset classes in the US and international markets. The report also illustrates the impact of globally diversified portfolios.
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The start of a new year is a great time to reflect on the past, set goals for the future, and tune out predictions from the financial industry.
The S&P 500 Index rose by 23.3% in 2024. This far exceeded expectations from analysts polled at the end of 2023, none of whom believed the S&P would grow by its historical average rate of return, 12.3%. In fact, nearly half of the analysts predicted a negative year for the index. Hopefully those analysts didn’t eat their own cooking and divest from US stocks during such a strong year.
The dispersion in predictions for 2024 highlights the challenge with making asset allocation decisions based on forecasts. Individuals arrive at different expectations because they may see the world differently. The market aggregates these disparate viewpoints, offering a wisdom of the crowd that’s very difficult to beat.
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If Eeyore were a value investor, he would probably be among those who feel that a positive value premium can only come at the cost of a growth stock tumble. This view implies value stocks can post strong relative returns only because growth stocks underperformed, not because value delivered strong absolute performance. While growth underperformance was the case for July’s US value premium resurgence, this has not been the norm for the value premium historically.
Since 1927, US value stocks outperformed US growth stocks in 58 out of 97 calendar years. During positive value premium years, growth stocks returned an average of 10.25% compared to their average across all years of 11.86%—lower, but not exactly a tank job. Only in 17 out of 58 of positive value premium years was growth’s return negative. On the other hand, value’s average return in positive value premium years, 25.08%, markedly exceeded its long-run average return, 15.93%.
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