That’s it for the bad. On to what could be good. As I was doing research for this piece, I came across a post by writer Ben Carlson, where he highlighted the following market statistics.
“Over the past 100 years or so, the U.S. stock market is up roughly 3 out of every 4 years on average.
Almost 60% of all calendar years have seen gains in excess of 10%.
More than one-third of all years have experienced returns of 20% or more.
You’ve been more likely to gain 20% or more than experience a down year in that time.”
Understandably, these facts don’t make you feel good about the current state of your portfolio. Probably shouldn’t. Being in the storm looks and feels different than looking back at what it felt like to actually be in the storm. Pain in the moment is still pain and we aren’t downplaying that by any means. However, it should lend some optimism as to what the future holds for long-term investors. While not frequent, down years and even bear markets in stocks are completely normal. It’s the assumed risk that one must take in order to earn the 7-9%/year equities return over the long haul.
To show this forward-looking optimism numerically, I pulled the chart below, which shows 1, 3, and 5-year returns post bear market. As you can see, the returns are staggering after the stock market decides to bottom.
While nobody actually knows exactly what will happen in the next 6-12 months, and we very well could have more downside to realize, you can see why long-term planners/investors start to get a little excited about forward returns. As the “CNBC crowd” waxes daily about the “ultimate market bottom”, the smart money plots the future toward the next economic cycle. If there is a message to take away from this ranting, it's exactly that. Keep the numbers and the reality in perspective. Don’t buy into the redundant narrative. Were our clients reliant on short-term market swings, it would be a completely different story. We aren’t day traders, and neither are you, so leave the daily bottom chatter to the TV and social media talking heads.
As always, thank you for listening, and feel free to reach out with any thoughts or comments you may have.
Thanks
Frank
Retirement Capital Advisors
800 Battery Ave SE
The Battery, Suite 100
Atlanta, GA 30339
Office- 412-722-3795
Securities and Advisory Services offered through Commonwealth Financial Network®, member FINRA/SIPC, a Registered Investment Adviser.
This writing is for the clients and associates of Retirement Capital Advisors only. It is not intended as specific investment advice. You should talk to your own financial advisor about specific investments. No guarantees are implied or given and investing involves risk of loss of money. All statements made herein are forward looking and assumptive and do not guarantee any outcome.
All indices are unmanaged, and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results.