Hurts So Good
As we consider the solid year-to-date performance of the investment markets, it reminds me of one of my favorite and most iconic songs of the 80’s. In 1982 John Cougar Mellencamp released his first iconic album. There were many huge hits of that record including “Jack and Diane” and “Hand to Hold Onto”, but one that surprised his producers with its success the most was “Hurts So Good” which rose to #2 in the top 100. Modern day investing can sometimes “Hurt So Good”, and, in particular, 2016 may not have felt great with the rough start to the year (at one point down 12%) and the continuous election and news cycle doing anything but inspiring confidence in the future. However, just like the most famous line in the song says “sometimes love don’t feel like it should”, sometimes we think investing for success should feel good all the time. That would be great but most often just isn’t true. To that end, many would be shocked to learn that despite how things might feel the US equities are up over 7% on the year.

Celebrating with Humility and Focusing on What We Can Control
Although it would be tempting to focus on current success, we know that short-term things can change rapidly regardless of how things “feel”, and that long-term success is not an accident and is actually quite predictable when based on solid investment principles such as value, expected returns, risk vs. reward, and importantly, diversification. That is why each quarter we will not only focus on current returns, but also, more importantly, the 10-15 year perspective, which helps protect us from becoming distracted by shiny things or reactionary emotions. To that end here are the highlights:

Even with the Q1 sell-off and the “Brexit Exit”, the S&P 500 is up over 7% YTD for 2016.
Dimensional (DFA) Core US Equity Funds performed even better and are up over 8%
US Aggregate Bond index is up 5.8%
The International market index is up 2.2%, but the DFA International up over 5.7%.
Dimensional Emerging Funds are up over 18%, vs the index of 13%
15 Year S&P 500 performance is up 6.87%, with Small Cap Value up over 10% per yr

The great writer of the 19th century, C.S. Lewis, was fond of observing that humans “need to be reminded more that instructed.” Last quarter, we emphasized the importance on not getting distracted by the “Brexit”. Yes, indeed, remember that it was only 3 months ago when the markets had temporarily panicked. This is just the most recent example in a long list of events that at the time seemed painfully big, however their impact/importance is diminished when viewed with a broader perspective. I guess that’s why patient, disciplined investing sometimes feels like “it hurts so good.”

As always, we are honored that you have chosen E|Financial Alliance to help you implement a vision and plan for your future, and look forward to your continued success.

Mitch & Destin