4 Powerful Facts About Stocks You Need To Know for 2019

Below are six bankrupt companies that can help you understand how to protect your financial future. These six notable corporate collapses destroyed 18 years of wealth creation in only two years.

Here are four data points you need to know:

1. Investors tend to stick with what they know. The average loss of a single stock in the S&P 500 is bigger than the market as a whole.
2. Over concentration in a single stock leads to the higher chance of downside risk in a portfolio. One standard deviation loss for the S&P 500 Index is -9%. The same one standard deviation loss is -22% for an average S&P 500 single stock.
3. Behavioral finance shows that biases like familiarity and overconfidence can lead to investors having a blind spot. When constructing a portfolio with familiar companies this is most prevalent. It is necessary to know the common myths about investing to protect your financial future.
4. In 1965, the average tenure of companies in the S&P 500 was 33 years, in 1990, it was 20 years. Therefore, many analysts believe that the duration of companies in the S&P 500 will go down even less.

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Chart Source: Goldman Sachs Asset Management, 01/07/2019

Past performance is no guarantee of future results.

S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index. U.S. equity market sector volatility is represented by the standard deviation of the top 3,000 U.S. stocks as measured by market capitalization, and as defined by the GICS, from Jan. 1, 1996 to Sep. 30, 2017. Standard deviation measures the historical volatility of a sector.

The greater the standard deviation, the greater the volatility.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Fusion Wealth Management is not affiliated with Kestra IS or Kestra AS.