Dimensional Fund Advisors: 2016 Review – More Views Heard From

First, we published our own “Year in SAGEbroadview Review,” summarizing the posts we shared in 2016. Then, we offered a double-header of fourth quarter and annual market reviews from Dimensional Fund Advisors. Before we set our sights forward, we’d like to share a couple more resources that offer important lessons learned from 2016.

If you were with us this time last year, you may recall that the markets were in a much gloomier mood amidst a panic-driven sell-off. The demoralizing numbers generated many a grim financial forecast in the early days of 2016, following a year-end 2015 market climate in which “financial optimists seemed in short supply.” 

Not so fast. That may be the biggest take-away from Dimensional’s newly released 2016 Market Review, which we share with you today. While annual 2015 and early-2016 performance had been marred by nearly universal negative-to-low returns (especially from small-cap and value stocks), 2016 annual returns were nearly as polar opposite to that experience as returns can get.

We invite you to take a closer look at this latest review and let us know if we can discuss any of the questions or ideas it may generate. And, in a pairing as fine as a bottle of wine and some excellent cheese, we also invite you to consider Dimensional’s most recent “Down to the Wire” column by the ever-inspiring Wes Wellington, in which he too takes “A Look Back at 2016.”

Combined, they well reflect this quote from Nobel Laureate Eugene Fama, found in the 2016 Market Review: “There’s no information in past returns of three to five years. That’s just noise. It really takes very long periods of time, and it takes a lot of stick-to-it-iveness. You have to really decide what your strategy is based on – long periods of returns – and then stick to it.”

Well said. That said, please let us know if we can say more.

SAGE Serendipity: Here’s a fun list dealing with etymology from James Harbeck in The Week: 11 words whose meanings have completely changed over time. This Rube Goldbergian (now there’s a word for a future article) list takes us through historical meanings of words such as: nice, warp, and cloud to name a few.