Dimensional Fund Advisors posted their year-end review of capital markets last week.  Along with your year-end report and Servo letter, this should provide you with interesting and helpful context for what was an extraordinary year.  Click here to read the article.

I want to direct your attention to one chart contained in the article.  If you read nothing else, pay particular attention to Exhibit 3.  I have reproduced it below.


Regardless of what the financial media might tell you, the investment story of 2020 was not much different from most years — we saw a dramatic decline for stocks in Q1, which prompted over $1Trillion of investor money in the global stock market to flee for the relative “safety” of money market accounts!  

Over the next nine months, the S&P 500 appreciated over +47%, the MSCI All Country World ex-US stock Index gained over +44%, and US small cap value stocks gained +67%!  The return on money markets over this period? Zero.

Talk about selling low? Panic selling and bad timing decimated more investor portfolios last year than you can possibly fathom.

Warren Buffett is fond of saying “It won’t be the economy that will do in investors; it will be investors themselves.”   Never was this more true than in 2020.