Full stop. The end. Period. No more. No Mas. I’ve noticed lately that politicians, commentators, and other public figures have been using the term “full stop.” I guess they want to punctuate their point, so the viewer or reader knows they’ve stated their position, and there will be no more discussing the issue. They’re moving on to the next item.
On November 25, 1980, Roberto Duran was fighting Sugar Ray Leonard. During the fight, Mr. Duran raised his arms and said, “No Mas.” He had enough and didn’t want to finish the fight.[1] He was done – a stunner for the boxing world.
According to Webster’s Dictionary, full stop means period, and it was first used in 1643, and the origin is “chiefly British.”
The financial planning and investment management industry has their version of full stop items where no more explanation is needed. Here’s a shortlist.
- Individuals who complete a financial plan have three times (3X) the assets of those individuals who do little or no planning.[2]
- Stocks outperform bonds. The 92-year average annual return for common stocks has been 10%, while long-term government bonds returned 5.5%. A $1 investment in large-company stocks is now worth $7,0257, while $1 invested in bonds is worth $142.[3]
- Small-company stocks outperform large-company stocks. The Dimensional U.S. Small Cap Value Index averaged 13.1% from 1928 to 2018. A $1 investment is now worth $72,335. The Dimensional Large-Cap Value Index averaged 11%. A $1 investment in this large-cap index is now worth $13,442.[4]
- Asset allocation accounts for 93.6% of your investment return. The remaining 6.4% is attributed to market timing and investment selection.[5]
- Passive index investing is better than active stock picking. The Standard & Poor’s study of passive v. active reveals that over a 15-year period, 95% of active fund managers fail to outperform their benchmark. The data is similar for 1, 3, 5, and 10 years.[6]
- Lower fees are better than higher fees. Less is more.
- Working with an investment advisor can help you increase returns. A study by Vanguard quantified an advisor relationship can add 3% in net returns.[7] An advisor can help with financial planning, estate planning, investment planning, charitable planning, and much more.
Full Stop.
The grass withers, the flower fades, but the word of our God will stand forever. ~ Isaiah 40:8
October 10, 2019
Bill Parrott, CFP®, CKA® is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.
Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.
[1] https://en.wikipedia.org/wiki/Sugar_Ray_Leonard_vs._Roberto_Dur%C3%A1n_II, Website accessed October 10, 2019
[2] http://www.nber.org/papers/w17078
[3] Dimensional Funds 2019 Matrix Book.
[4] Ibid.
[5] Determinants of Portfolio Performance, Financial Analyst Journal, July/August 1986, Vol 42, No. 4, 6 pages; Gary P. Brinson, L. Randolph Hood, Gilbert L. Beebower.
[6] https://us.spindices.com/documents/spiva/spiva-us-year-end-2016.pdf