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Most people would like to see a gain of 21.6 percent on their annual statement. That was the annual return for the Standard & Poor (S&P) 500 Index during 2017. In general, U.S. stock indexes did quite well last year – and the year before, too. For instance, the S&P 500 Index was up 11.8 percent in 2016.1
While no one can invest directly in an index (many mutual fund companies offer index based fund options) recent returns make it easy to understand why U.S. stock markets have been popular with investors. Morningstar reported record amounts of money flowed into various types U.S. stock investments during 2017.2 Was this a result of the proverbial “herd mentality”? Whenever large numbers of investors are doing the same thing, we believe a prudent course of action is to step back, take a breath, and evaluate the situation. Here are two questions that investors should consider:
