Market forecasting sets expectations. Investment research.
BE CAREFUL OF AVERAGES! The following statements are true, but misleading:
When selecting and monitoring funds or securities, we utilize a hybrid approach which combines our internal research with advice from strategic partners. This broad range of input ensures that your investments receive an in-depth analysis. Capital Market Projections. Historical returns, while accurate, may not accurately represent realistic forward returns. At Hills Bank, we believe a more robust and professional approach incorporates Capital Market Projections (CMPs) into the analysis. CMPs provide a forward-looking evaluation of the current economic environment, providing both a return and a risk forecast for asset classes that may be used in your investment portfolio. The CMP is tested against history for reasonableness and grounded on present circumstances. CMPs are not meant to peg the actual return of a portfolio. Rather, CMPs help quantify the range of return outcomes a portfolio may experience. The process of incorporating CMP into investment management helps us test if your investment goal can be met with a reasonable probability of success. The end result provides you with a plan to help you achieve your investment goals.
Over the past 70 years, stocks have averaged 10-12% annual returns.
Iowa’s annual average temperature is 50.4˚F. Source: www.agclassroom.org
Market returns are like the weather in Iowa—sometimes we have above-average days, sometimes we have below-average days! Over time, strong returns offset weak returns and investors’ annualized performance may “average” out. Actual investment returns in any given year may be above or below “average,” but are seldom actually average!
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