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Finance

Looking Ahead to 2005

There are a few conflicting historical stock market phenomena pertinent to 2005, which is a post-election year and the fifth year of this decade. The S&P 500 index has performed remarkably well in the fifth year of decades since 1881. The index, however, has performed below average in years following an election, except when the incumbent president stays in power or when the post-election year is the fifth year of a decade.

Categories
Finance

Pay to Play

There is an inherent conflict of interest when a person giving investment advice also works for a sell-side investment company (i.e., a brokerage) that manages mutual funds. Often, their advice will include their company’s own mutual fund offerings regardless of the funds’ merits (or lack thereof). This biased advice can diminish investors’ portfolio returns.

Categories
Finance

Learning From Prior Equity Market Patterns

In the world of investments, historical data often help investment managers predict the future performance of the markets. My colleagues and I searched for periods with similar characteristics to today to help guide our investment decision-making during this period of almost inexplicably weak equity markets (although the high price of oil seems to have been taxing the markets recently). We found an eerily similar period with many significantly similar characteristics.