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But, I’m Moving Sideways…


You might be wondering why your investment portfolio is not growing thus far in 2014.  Is it the “market”?  Or, Is it the funds you are invested in?  Maybe this will help.  The Global Market Index (GMI) is up 2.6% for the year.  GMI is an unmanaged, market-value-weighted portfolio of all the major asset classes in the world.  The result is a real world benchmark created by James Picerno of  So, if you are invested like GMI (roughly 58% in stocks and 42% bonds globally) your return should hopefully be close to the GMI.  Your actual returns might be more or less depending on a variety of factors such as taking on more or less risk, fees and expenses, and quality of fund managers.

Here’s a couple of ideas for what to do during a sideways market:

1.        First, be patient.  Markets never move in linear fashion.  They typically move based on human emotion and right now they are feeling cautious.

2.       Remember that dividends make up to 95% of returns in sideways markets, according to Vitaliy Katsenselson, author of The Little Book of Sideways Markets.

3.       Diversification helps, especially if you are willing to think globally.

4.       Rebalancing during periods of rising and falling markets is the best way to sell what has performed well in the past (ie US stocks the past few years) and buy what might presently be on sale!

5.       If you have money to invest and are worried about the lack of direction, spread out when you invest the money via a dollar-cost-averaging approach. 

Sometimes it just takes a little time for humans to feel better again.  Hang-in-there and remember it sure beats the times when people are feeling really lousy!



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