If there’s one thing we can count on as investors, it’s that our capital markets never stop teaching us important lessons … sometimes over and over again. This summer’s Greek economic crisis – years in the making but reaching critical mass of late – is offering a refresher course on how one country’s news impacts us around the globe.
The news isn’t pretty. Not for the world, not for Europe and, especially not for the beleaguered citizens of Greece. But if you put the unfolding events in historical context, it becomes clear why the sensible course for investors is as Dimensional Fund Advisors Vice President Weston Wellington describes in this excellent, 2.5-minute video on the subject:
“This idea that we should dip and dart and reduce our exposure to risky assets based on some prediction that we or others might make more often than not leads to frustration and failure to capture the rates of return that the world’s capital markets have to offer.”
The video puts this lesson into context in a couple of ways. First, we are reminded that, after frightening market dips during past historical crises, the market has typically gone on to not only survive but thrive in the years following … at least for those who remained invested.
Wellington also offers interesting insights about current markets, pointing out that many investors might be surprised to realize that year-to-date returns throughout most of Europe have not only been positive, but have handily exceeded domestic returns as of June 30, 2015.
We can be quick studies and better investors in response to the markets’ sometimes-challenging lessons. Or we can learn the hard way. Choose wisely … and call us if we can assist.