Quarterly Thoughts – Q1 2013

Market Volatility is the norm, not the exception.  Yearly, we provide an updated version of the enclosed Periodic Table of Investment Returns.  Given the recent global financial crisis and partial recovery market experience, the table is particularly timely, as it provides a broader perspective.  This chart is a powerful visual demonstration of the unpredictability of investment returns across major asset classes, and indirectly illustrates the importance of diversification, discipline, rebalancing to a target allocation, and controlling risk.

For many investors it is often tempting to go with the “hot hand.” (“The trend is your friend,” as the saying goes.)  Unfortunately, that is often a recipe for financial disaster.  Last year’s top performer is often at, or near, the bottom in the ensuing years.  Rational asset allocation and diversification across many investment styles, and the discipline to rebalance to your asset allocation, is the key to long-term success.