Recent Insights from Dimensional -- Ignoring the Bumps

Ignoring the Bumps

By Wes Crill, PhD, Senior Investment Director and Vice President

Posted September 12, 2024

The US stock market had two declines this year that startled many investors. One was just over a month ago when stocks fell about 8.5% from July 17 through August 5. I had actually forgotten about the other one back in April, when stocks dropped 5.7% from April 1 through April 19.1?Maybe I’m wired to ignore anything that begins on April Fool’s Day.

What may have gotten lost in focusing on the declines is how well the US market has performed for the overall year. Through the end of August, the Russell 3000 Index was up 17.1%. That’s substantially higher than the index’s average calendar year return of 13.2% from 1979 to 2023.?

There’s an important message here about not overreacting during a downturn—it could be a momentary blip in an otherwise upward?climb for the markets. In fact, the Russell 3000 had an intra-year decline of at least 10% in 25 out of 45 years since 1979. In 17 of those 25, the index ended up for the year!?

Footnotes

1. Measured by the Russell 3000 Index.

Disclosures

All expressions of opinion are subject to change. This information is not meant to constitute investment advice, a recommendation of any securities product or investment strategy (including account type), or an offer of any services or products for sale, nor is it intended to provide a sufficient basis on which to make an investment decision. Investors should consult with a financial professional regarding their individual circumstances before making investment decisions. Diversification neither assures a profit nor guarantees against loss in a declining market.? Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission. ?

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