• Research and data-driven behavioral insights to guide client conversations

  • Practical application of behavioral finance to portfolio construction, management and analysis

  • Ideas, guides and materials designed to differentiate and grow your practice

  • Current market conditions from the Behavioral, Economic, Valuation, and Technical perspectives

Do Fees Help Identify Good Managers?

Mutual fund investors tend to focus on fees in order to find active equity managers that can outperform over the long run. While it is true that higher fees lead to lower performance on average, the data indicate you have an above-average chance of selecting an outperforming manager by simply picking from funds that have an annual expense ratio less than 1.5%.

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How Long do Bear Markets Last?

The current Bear Market, defined as a loss of 20% or more from an all-time high, has lasted 11 months so far. But did the market hit its low point at -25% on October 13, or will there be more declines to come? While every Bear Market is different, history can provide some perspective on where we are now. The median duration of the decline for the 11 Bear Markets charted below is 15 months while the median loss is 34%.

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War and Markets

Armed conflicts are highly charged events that by their very nature generate legitimate and strong emotional responses. While there are many questions and implications around armed conflicts, as long-term investors, an important question is what we should do from an investment perspective? For guidance, we look at how the US stock market has reacted to 16 armed conflicts since the end of World War II.

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A Different Kind of Bear

The last couple of years have been very unusual. 2020 was one of the most volatile markets in recent history but the S&P 500 Price Index finished with a positive return roughly double its annual average. 2022 was just the opposite. While there was little evidence of investor panic typical of Bear Markets, stocks significantly declined in value with the S&P 500 finishing the year down 19.4%.

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Bear Market Rally or New Bull Market?

Investors wonder about the current bear market and want to know if we are “out of the woods” or if there is “more pain to come”. The graphic below shows that the stronger the rally, the higher the probability that the bear market will end. After a 17.4% rally from the June S&P 500 lows, there is a low probability (3.6%) that the current rally will fail. However, if it does fail, the historical average decline from these levels to the ultimate bear market low would be 31% and take seven months.

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Nobody Can See the Future

It’s that time again where everyone is offering their views on the upcoming year, with market commentary and outlooks. Last year’s results, data and opinion are assembled into a narrative along with forecasts and implied recommendations. Investors seeking to reduce uncertainty and anxiety are easily attracted to such prognostications.

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AthenaInvest Advisors LLC
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Greenwood Village, CO 80111

Phone:   (877) 430-5675
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Email:     support@athenainvest.com