Below is what the stock market has returned on average over the following time periods. The picture shows what the stock market (and bond market) has returned in any given year-as represented by each dot. Investors need to understand how the market whipsaws back and forth, however by staying the course and being patient investors can earn a respectable return.
Annual stock returns:
100 years: 10.13%
75 years: 10.95%
50 years: 9.8%
25 years: 9.47%
-Deutsche Bank, returns effective Aug. 31, 2014.
Investors’ appetites for risk have been waning as a result of changing demographics and increasing market volatility. The authors provide a framework to construct an income-focused portfolio as the demand for reliable current income increases. Income-oriented portfolios are somewhat less diversified than traditional total-return portfolios, but they can expect to generate higher levels of income than total-return portfolios. Click here to read the entire abstract. - Abstract author Paul R. Rossi, CFA
Quick Summary: The hedge fund industry claims that actively managed funds can offer uncorrelated alpha compared with traditional investments. Attempting to gain insight into the value added from actively managed long–short equity hedge funds, the author finds that as a group, they tend to produce negative alpha during periods of market instability—the opposite of what they claim. Click here to read the entire abstract. Abstract author - Paul R. Rossi, CFA