A Vivid Illustration Of How Portfolio Theory Worked In 2017

The top performing types of U.S. stocks in 2016 were the biggest laggards in 2017. Meanwhile, the worst-performing types of U.S. stocks in 2016 were the biggest winners in 2017.

Classifying investments based on their characteristics and managing them based on historical behavior does not guarantee success but it imposes a discipline and methodology this firm believes in. Borne from the work of academics in the early 1950s, this framework for investing is now taught in the world's best business schools and is also embraced by institutional investors as a way of bringing order and imposing a quantitative process on wealth management.

Global stock market returns in 2017 versus 2016 reflected a similar mirror image, though not quite as close to perfect. In 2016, China's burgeoning stock market returned one-half of 1% and European bourses returned slightly less. Of these seven types of U.S. and foreign stocks, China and Europe were the leaders, with the nascent Chinese stock market skyrocketing 49% and European share values returning 27.5%. Meanwhile, the biggest winners of 2016, small-cap U.S. stocks, were biggest laggards of 2017.

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This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation.

Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.

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