Reality – Expectations = Happiness

http://seekingalpha.com/article/1821712-reality-expectations-happiness?source=feed By AllianceBernstein:

By Seth J. Masters

Many US investors may be disappointed when they open their account statements. Despite the widespread news that the Dow Jones Industrial Average gained 21% in the first 10 months of 2013, most US investors’ taxable portfolio returns were far lower—typically somewhere between 5% and16% range.

Why? With interest-rates rising, bond markets have returned little, if anything this year. As a result, no balanced account could come close to matching the results of US stocks (Display).

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Making matters worse, many investors have at least some allocation to non-US stocks. While total returns (including dividends) for the developed international stock markets have also been strong this year (although below total returns for US stocks), emerging-market returns were just 0.3%.

Such a wide dispersion in asset-class returns is highly unusual, and has made asset allocation, which is always important, the primary driver of

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