Fidelity Chart Illustrates Walls of Worries

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Noobvestor
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Fidelity Chart Illustrates Walls of Worries

Post by Noobvestor » Sat May 14, 2011 10:23 pm

Just a visual reminder of the long-term resiliency of equities (this chart shows the US specifically - I wish they had a global one too).

Image

Via Fido: https://guidance.fidelity.com/viewpoint ... ail_weekly

Image

This PSA brought to you by Fidelity and your (usually) friendly neighborhood noob.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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stratton
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Post by stratton » Sun May 15, 2011 12:01 pm

Nice pictures.

I quit reading the Fido weekly stuff because they kept changing the RSS feed every few months. I get the message, "We have no clue about annoying our readership."

Paul
Last edited by stratton on Sun May 15, 2011 12:12 pm, edited 1 time in total.
...and then Buffy staked Edward. The end.

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Hondo
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Post by Hondo » Sun May 15, 2011 12:05 pm

Having a senior moment here -- what was "SARS Outbreak" in 2003?

retiredjg
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Post by retiredjg » Sun May 15, 2011 12:19 pm

The thing that caught my attention is that there have been 6 recessions in 38 years. That seems like quite a lot and reminds me we always need to be prepared for the stuff to hit the spinning thingy.

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stratton
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Post by stratton » Sun May 15, 2011 12:21 pm

retiredjg wrote:The thing that caught my attention is that there have been 6 recessions in 38 years. That seems like quite a lot and reminds me we always need to be prepared for the stuff to hit the spinning thingy.

That's about average. Looking back there is a bear market about every 6 or 7 years. I know bear market and ression don't necessarily go together.

What isn't average was the long stretch in the 90s where there was approximately 12 or 13 years without a bear market

Paul
...and then Buffy staked Edward. The end.

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Post by retiredjg » Sun May 15, 2011 12:29 pm

stratton wrote:What isn't average was the long stretch in the 90s where there was approximately 12 or 13 years without a bear market

...with the resulting couple of generations who think of that as "normal"....

A picture/graph is worth a lot!

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stratton
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Post by stratton » Sun May 15, 2011 12:29 pm

Hondo wrote:Having a senior moment here -- what was "SARS Outbreak" in 2003?

Bird Flu.

Paul
...and then Buffy staked Edward. The end.

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nisiprius
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Post by nisiprius » Sun May 15, 2011 1:56 pm

Noobvestor wrote:Just a visual reminder of the long-term resiliency of equities (this chart shows the US specifically - I wish they had a global one too).
Actually, Fidelity granted your wish and you didn't even notice it. The chart says

All returns represented by the MSCI EAFE index. (The MSCI EAFE index represents developed markets outside the U. S. and Canada.)

I give up--I can't figure it out. A screw-up, I suppose.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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HueyLD
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Post by HueyLD » Sun May 15, 2011 3:11 pm

nisiprius wrote:The chart says

All returns represented by the MSCI EAFE index. (The MSCI EAFE index represents developed markets outside the U. S. and Canada.)

I give up--I can't figure it out. A screw-up, I suppose.

Nisi,

They mislabeled the chart in the linked file. The chart actually came from Fido's Q12011 Market Update file http://personal.fidelity.com/products/f ... ate_q1.pdf on page 47. The title is: "Foreign Stocks: A Long-Term View Amid A Series of Unfortunate Short-Term Events" "Foreign Developed-Country Stock Total Return & Major Global Events (Jan 1973 – Mar 2011)"

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Post by nisiprius » Sun May 15, 2011 4:28 pm

Thank you for your detective work, Huey.

They really did it?

Fidelity used a chart of how foreign stocks responded to (mostly) U. S. events in order to show U. S. investors why they should "stay invested in U. S. stocks" during troubled times?

Are we cynical enough to think that someone at Fidelity was too lazy to get accurate data, and just said, "Eh, we'll use this chart--it's close enough and nobody is going to notice the difference?"

Words fail me. I can't come up with a suitable wisecrack. Only emoticons can convey the rich and complex nuanced intensity of my angry yet baffled astonishment. I stand in awe of Fidelity's crack research team.

:!: :!: :!: :?: :?: :?: :lol: :cry: :cry:
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Post by matt » Mon May 16, 2011 9:51 am

stratton wrote:
Hondo wrote:Having a senior moment here -- what was "SARS Outbreak" in 2003?

Bird Flu.

Paul


SARS and Bird Flu are not the same thing.

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Post by CrankyManager » Mon May 16, 2011 10:22 am

nisiprius wrote:Thank you for your detective work, Huey.

They really did it?

Fidelity used a chart of how foreign stocks responded to (mostly) U. S. events in order to show U. S. investors why they should "stay invested in U. S. stocks" during troubled times?

Are we cynical enough to think that someone at Fidelity was too lazy to get accurate data, and just said, "Eh, we'll use this chart--it's close enough and nobody is going to notice the difference?"

Words fail me. I can't come up with a suitable wisecrack. Only emoticons can convey the rich and complex nuanced intensity of my angry yet baffled astonishment. I stand in awe of Fidelity's crack research team.

:!: :!: :!: :?: :?: :?: :lol: :cry: :cry:


And someone correct me if I'm wrong, but doesn't Fidelity have to submit this sort of thing for review? Is it FINRA who does this? It's my understanding that all distributed information intended for clients or prospects has to be reviewed for accuracy (or at least the absence of misrepresentation).

That's almost as embarassing as Fidelity using MSCI EAFE returns in a chart labeled "S&P 500 and Major Global Market Events."

:oops: :oops: :oops:
"Does not Dionysius seem to have made it sufficiently clear that there can be nothing happy for the person over whom some fear always looms?" -- Cicero

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nisiprius
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Post by nisiprius » Mon May 16, 2011 12:05 pm

I actually logged into my Fidelity account and sent them a cold prickly note suggesting they redo the chart and repost the article with an explanation and an apology, but I doubt I'll get more than a courteous reply. I haven't been able to find a name or direct email address for the editor of Fidelity Insights.

I'm sure the defense will be that the S&P chart wouldn't actually look all that different, and that it's just to illustrate a point which the correct data supports just about as well as the bogus data. Which I believe to be true. (It occurs to me that I hope I'm not getting anyone into serious trouble by bringing it up.)

But, still.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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nisiprius
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Re: Fidelity Chart Illustrates Walls of Worries

Post by nisiprius » Tue May 17, 2011 9:18 am

For your comparison pleasure. Here's the chart HueyLD found.

I don't know PowerPoint. How does it happen that almost everything in the chart has changed slightly in appearance--color, thickness of line, typefaces, line breaks in the legend--and yet it's the same chart? Can you import a chart into PowerPoint and have it apply a different style sheet or something like that?

Image

And here's the one from the "Six Strategies" article:

Image

They can't both be right!

[Wait] Actually, they could both be right, if it happens that the S&P 500 and the MSCI EAFE index track identically...
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Post by RaleighStClaire » Tue May 17, 2011 10:00 am

Maybe the graphs are from a parallel universe where both the MSCI EAFE and S&P 500 returned the exact same of the time period!
Where's that red one gonna go?

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Re: Fidelity Chart Illustrates Walls of Worries

Post by Valuethinker » Tue May 17, 2011 10:25 am

Noobvestor wrote:Just a visual reminder of the long-term resiliency of equities (this chart shows the US specifically - I wish they had a global one too).

Image

Via Fido: https://guidance.fidelity.com/viewpoint ... ail_weekly

Image

This PSA brought to you by Fidelity and your (usually) friendly neighborhood noob.


Truly truly dangerous chart.

By zooming out far enough, you can make every market crash look infintesimal.

Note the apparent cherrypicking of market bottoms.

From the perspective of September 1929, early 1968 or December 1999 stocks have had a truly rough ride. Each led to a very tough 10 years, with a lot of lost value.

Don't even think about Tokyo/ TOPIX January 1990.

The use of a linear scale makes that chart quite deceptive.

All we can say is that stocks have, over only 4 independent periods, been a good investment on a 30 year view. And over 6 independent periods, have been a good investment on a 20 year view (with one exception?).

Over 12 independent periods, they have been a pretty good investment (with 2 stinkers).

That's US stocks of course.

However many stock markets in this time period blew up and died (Vienna, Buenos Aires, Berlin and Cairo, 1910 for example). St. Petersburg and Moscow 1914 were other bad times to invest. Shanghai 1948.

Travel with care.

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Post by Rodc » Tue May 17, 2011 11:02 am

Can you import a chart into PowerPoint and have it apply a different style sheet or something like that?


Yes. As typical with Microsoft there are multiple ways to do this. And sometimes you have to fight with the software to keep the chart how you want it as Microsoft products often make their own judgments and just change things on their own, and it can be hard at times to figure out how to override this.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Post by nisiprius » Tue May 17, 2011 4:37 pm

Rodc wrote:Sometimes you have to fight with the software to keep the chart how you want it as Microsoft products often make their own judgments and just change things on their own, and it can be hard at times to figure out how to override this.
Aha! That's the explanation!

Image
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Post by Rodc » Tue May 17, 2011 4:42 pm

nisiprius wrote:
Rodc wrote:Sometimes you have to fight with the software to keep the chart how you want it as Microsoft products often make their own judgments and just change things on their own, and it can be hard at times to figure out how to override this.
Aha! That's the explanation!

Image


Those Microsoft guys are really slick!
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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nisiprius
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Post by nisiprius » Tue May 17, 2011 5:54 pm

Fidelity has removed the miscaptioned chart from the six strategies article.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Post by retiredjg » Tue May 17, 2011 5:59 pm

:shock: Oh my, Nisi. You've gone and done it now!

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