Six Asset Classes – August 2013 Returns

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Asset Class performance - 201308

Returns in August were negative across the board with US stocks losing the most.

Many investors, however, still think that US stocks are “doing better” (present tense) because their year to date returns are higher than foreign. This even though foreign stocks and resource stocks have done better than US stocks for the past two months.

This recency bias causes most investors to under perform the very investments they are invested in as they chase returns. Greg Fisher has a great article in the September 2013 issue of  Financial Advisor Magazine on this subject entitled, “The Driver Of Future Behavior” which I highly recommend reading.

The short answer is to have an asset allocation and regularly rebalance back to it. Rebalancing is a contrarian investment strategy and should avoid the lost return associated with chasing returns as well as receive a nice rebalancing bonus as well. Don’t let the returns of a month, a quarter, or even a year sway you from what is otherwise a brilliant investment strategy.

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President, CFP®, AIF®, AAMS®

David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. In addition to his financial writing, David is a co-author of The Haunting of Bob Cratchit.

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Wealth Manager

Austin Fey is a Wealth Manager at Marotta Wealth Management, specializing in charitable giving and asset allocations. She is a regular contributor to our Marotta On Money articles, often giving advice to those just getting started in finance.

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