The Lessons of 2000 By Kevin J. Bannon, EVP, Chief Investment Officer 2000 was a frustrating and disappointing year for most investors. After seesawing up and down through most of the first three quarters, a sharp sell-off in the fourth quarter put last year into the record books as the first down year for stocks since 1990. Last year was a learning experience for most new investors and a refresher course for many experienced ones. Markets are not always user-friendly.
Stocks can, in fact, go down without bouncing right back.
Risk is now a topic that is receiving much more attention than it did during the roaring 1990s. Very few investors object to volatility when it is to the upside, but downside volatility is an entirely different matter. The most positive aspect of this renewed awareness is that it is prompting investors to refocus on the trade-off between risk and return in thinking about their investment goals and objectives. The 1990s may have spoiled investors in terms of raising expectations to unrealistically high levels. 2000 provided a reality check.