How Did Investors Survive the 1980s?

Investing Through the DecadesThe following is an excerpt from our ebook, “Investing Through the Decades,” which you can download by clicking here.

Throughout history, when bad news and events touched the daily lives of investors and caused nest eggs to shrink, it’s been natural to ask, “Is this the end of investing as we know it? Have new developments changed things so much that the old patterns no longer apply?”

These four stories should help illustrate an important investment principle: Markets have always gone up and down, sometimes in dramatic and alarming ways. For investors who have maintained diversified portfolios over the long term, the stock market has consistently provided a positive investment experience.

Screen Shot 2016-06-03 at 12.44.13 PM

Screen Shot 2016-06-03 at 12.44.20 PM

The 1980s had unique problems that proved as difficult as the previous decade. High inflation continued, pushing the US into a severe recession. Mortgage rates topped 20%, putting homes out of reach for many. Trouble in the economy drove homeowners into default.

This was the background to Linda’s first decade as an investor. Mortgage defaults caused widespread bank and savings loan failures. And 1987 saw the Black Monday crash.

Could Linda’s portfolio have survived these dramatic events?

Screen Shot 2016-06-03 at 12.44.33 PMScreen Shot 2016-06-03 at 12.44.45 PM

Screen Shot 2016-06-03 at 12.44.58 PM

Could Linda’s portfolio have survived? Yes, in fact it thrived, thanks to diversification and discipline. US small stocks climbed early, looking ready to repeat as the decade’s best asset class.

But Linda’s portfolio beat US small. International stocks, which limped along in the early years, took off later. Linda’s allocation helped drive gains in her portfolio.

Click here to download the rest of our ebook, “Investing Through the Decades.”

Screen Shot 2016-06-03 at 12.45.07 PM

 

McLean Asset Management Corporation (MAMC) is a SEC registered investment adviser. The content of this publication reflects the views of McLean Asset Management Corporation (MAMC) and sources deemed by MAMC to be reliable. There are many different interpretations of investment statistics and many different ideas about how to best use them. Past performance is not indicative of future performance. The information provided is for educational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy or sell securities. There are no warranties, expressed or implied, as to accuracy, completeness, or results obtained from any information on this presentation. Indexes are not available for direct investment. All investments involve risk.

The information throughout this presentation, whether stock quotes, charts, articles, or any other statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor we shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in the transmission there of to the user. MAMC only transacts business in states where it is properly registered, or excluded or exempted from registration requirements. It does not provide tax, legal, or accounting advice. The information contained in this presentation does not take into account your particular investment objectives, financial situation, or needs, and you should, in considering this material, discuss your individual circumstances with professionals in those areas before making any decisions.