The Stock Market Did What? - Old Peak Finance

The Stock Market Did What?

January 17, 2015

stockmarketwhat

The Stock Market Did What?

January 17, 2015

In 2014, the stock market was up 10.0%.

In 2014, the stock market was up 13.7%.

In 2014, the stock market was up 12.6%.

In 2014, the stock market was up 4.9%.

So which was it? All of them.

Specifically, the Dow Jones (an index of 30 large, well-known stocks) was up 10.0%. The S&P 500 (the 500 largest US stocks, representing 70% of the US stock market) was up 13.7%. The entire US stock market (about 3,000 large, mid-cap and small-cap stocks) was up 12.6%. And the entire global stock market (the US is about half that) was up 4.9%.

The problem: when the media talks about the market, they really mean large, US stocks. So if you are more diversified than that, they aren’t talking to you. When large US stock soar, as they did in 2014, you wonder why you aren’t doing as well. When small or international stocks out-perform, you don’t notice.

If it’s important that your returns approximate media headlines, limit yourself to large US stocks. But to maximize returns, diversify. Over the last century, diversification paid off. Some years it can feel lousy. But if you can tune out the media, you’ll be happy in the long run with a broader mix.

This article is not intended to provide tax, legal, accounting, financial, or professional advice. Readers should seek advice from qualified professionals who can review their specific circumstances. Old Peak Finance endeavors to provide information that is accurate and current. However, we cannot guarantee that this information has not been outdated or otherwise rendered incorrect by new research, legislation, or other changes. Old Peak Finance has no liability or responsibility to any individual or entity with respect to losses or damages caused or alleged to be caused, directly or indirectly, by the information contained on this website.

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