A Chart for Successful Investors

Is your portfolio positioned for long term success?

At Chancellor Wealth Management, we utilize world class technology and personalized service to deliver customized financial planning and investment management solutions for our clients. Part of our strategy includes helping our clients to become successful long-term investors. 

In our research, we thought it would be helpful to take a look at this powerful chart which is put together by JP Morgan Asset Management in the most recent Guide to the Markets.  The chart illustrates the last 40 years of performance for the S&P 500. First, notice the returns above the line. These figures indicate where are the S&P 500 finished the year in terms of an annualized gain. Out of 40 years, 31 years finished with a positive yield.  That represents roughly 4 out of 5 years on average or 80% of the results. Of those years the average return was roughly a 16% gain when it was positive. Now take a look at the below the line. There were 9 years out of 40 that were flat or negative. Of those years the average down year was roughly a 13% loss. In total the average return for this entire period is 9%.  Now draw your eyes to the red dots below the line which represents what the low point was during each year. What is really interesting is it EVERY single year at some point there was a loss.  How can we explain this?  

The fact is that it is not only common- but it is regular occurrence when the market experiences short term selling pressure. Whether driven by news events or economic forces, in these times there are more sellers in the market than buyers-  at least temporarily. This drives the price down until the buyers return to the market and upward price movement resumes.  

These downdrafts are typically short-lived, and a long-term investor can game better insight by understanding these patterns and preparing for them. 

A few questions to consider: 

• Is your investment strategy prepared for short term losses that are likely inevitable?  
• Do you feel confident about your financial plan?  
• Do you understand correlation of how your investments perform in different market conditions?
• Is active or passive investment management right for you?
• Is your portfolio stress tested and do you implement strategies such as your account structure, diversification, asset allocation and rebalancing?  
• Do you take into account the role of taxes in your investment and retirement strategy?
• Do you have any investment concentrations?

If we can help you address any of these questions or If you would like to explore what financial planning can do for you-  please don’t hesitate to reach out to us for a complimentary consultation.   We look forward to hearing from you.  

The commentary is informational in nature and not intended to imply a specific strategy or course of action. Investment advice and recommendations are only provided according to each individual’s personal circumstances. Chancellor Wealth Management is an investment advisor firm registered pursuant to the laws of the state of Georgia. The firm is also registered to conduct business in the states of South Carolina and Texas.   Copyright © 2021 Chancellor Wealth Management, All rights reserved.