Financial Planning Update
Viewing Financial News Through The Long Lens Of History
Published Wednesday, January 27, 2021 at: 6:42 PM EST
Getting the news isn’t so easy these days! While being constantly bombarded, you need to filter everything you see and hear. Political, environmental, and financial news -- even sports – requires a sophisticated high-tech lens.
When filtering news about the economy and investments, it is wise to view everything through the long lens of history. It dramatically expands the scope of your knowledge, revealing a more realistic picture of what’s happening now.
For example, can you spot the major shift in the U.S. stock market in these figures?
If you answered by noting that the S&P 500 growth stocks are lagging badly, good for you! That’s right!
For small-cap value stocks to outperform the large-cap S&P 500 growth companies marked a major shift in leadership! But you could not have known that by looking at this chart of the last quarter.
To know that a new trend may be under way, you would have to know the long-term history of the stock market. Only by looking at these numbers through a long lens reflecting history would you be able to see this important shift in market leadership.
Just a quarter earlier, large cap growth stocks massively outperformed small and mid-cap value stocks, and that has been the long-term trend.
And, again, to know that, you’d have to examine the last five years of performance.
Financial news is rarely reported from the historical perspective of an investor building a sustainable retirement income stream. Count on us for financial news filtered through a lens reflecting history and investment experience.
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