Sycamore Asset Management
(317) 373-5023
Zionsville, IN
  • Home
  • About
    • Our Mission
    • About Christy Gregory
    • How We Are Different
  • Services
  • Articles
  • Education
  • Contact

The Importance of Expectations

July 1, 2008 By Christy Gregory

One of the main problems with investing deals with expectations. Sometimes investors don’t know what to expect while other times, investors have expectations that are way out of line.

For example, over the long term, an index of U.S. small stocks has historically had a 12% return (from 1923 to today – past performance is no indication of future returns).

But, how many times was the return around 12% – say between 10% and 14%? Most investors are surprised to learn that the answer is zero. There is not a single year (yet) when the return of small stocks fell within this range. Despite this, there were numerous years where returns were in the 40s%, 50s%, 60s% even 70s% followed by years with significant negatives losses.

If investors don’t know where asset classes within their portfolio or their portfolio in total are going to clock in then they don’t have appropriate expectations. This makes it very hard to remain disciplined – particularly for the short term.

So if you expect the US small part of your portfolio to have about a 12% return each year, you will be disappointed. But if you know its return over the long term is around 12% and that on a year to year basis it has never been 12% – you are more likely to remain disciplined.

Filed Under: Investments

Interested in Learning More?

If you lack peace of mind regarding your investments, we offer a no-obligation way to learn more about how Sycamore Asset Management, LLC can assist you.

An initial consultation is generally a thirty-minute phone conversation where we can discuss your situation and your needs and determine if there is a fit for moving forward.

Sign Up Now

Article Categories

  • Financial Planning
  • Investment Education
  • Investments

Article Updates

I write new articles occasionally. If you would like to be notified each time I publish a new article, please complete the form below.
  • This field is for validation purposes and should be left unchanged.

Copyright © 2023 · Sycamore Asset, LLC

505 W. Sycamore St. · Zionsville, IN 46077 · (317) 373-5023

Sycamore Asset Management, LLC is registered as an Investment Advisor with the state of Indiana. This website should not be interpreted as a solicitation to offer investment advisory services to residents of any state where we are not authorized to do so. Sycamore Asset Management, LLC. may only transact business where it is licensed or qualifies for an exemption or exclusion from licensing requirements.


Privacy Policy | Terms of Service | Disclaimer



site by Pixel Jocks