The financial services sector was among the top performers of thein 2019, when it yielded a 32% annual return. Investors who chased that performance and subsequently bought a bunch of financial services stocks"may have been disappointed" when the sector's returns fell by 2% in 2020 — a year when the S&P 500 had a positive 18% return, Aguilar said.
"Short-term market moves caused by recency bias can sap long-term results, making it more difficult for clients to reach their financial goals," he said.— based on market behavior, said Charlie Fitzgerald III, an Orlando, Florida-based certified financial planner. "People need to understand that recency bias is normal, and it's hard-wired," said Fitzgerald, a principal and founding member of Moisand Fitzgerald Tamayo."It's a survival instinct.""If I get stung by a bee once or twice, I'm not going to go there again," Fitzgerald said."The recent experience can override all logic."
Such a portfolio generally has broad exposure to the equity markets, via large-, mid- and small-cap stocks, as well as foreign stocks and maybe real estate, Fitzgerald said. It also holds short- and intermediate-term bonds, and maybe a sliver of cash, he added.