Market Movement - Up, down and sideways markets

 

This month we’ll look at the realities of investing in the stock market and how our views can often change based on recent experience. We often suffer from recency bias, which is the idea that whatever our recent experience is, skews our overall view and historical reality. We have been in a strong bull run with great gains in the market. There have been some bumps along the way such as early last year when Covid first struck, but that faded quickly in the rearview mirror as markets have come back so strongly.

 

The chart below shows a long-term view that is important to keep in mind. It is the average annualized return of 10.3% from 1926-2020 that would have turned $1 into $10,937 that motivates us to invest for the long run.

 S&P 500 Historic Chart Long Term

As we zoom in over various periods the picture can look much different. Despite a long-term upward trend, information by Capital Group shows us how often markets experience downturns and how severe those downturns can be.

 Stock Market Corrections

 

 

 Another view from JP Morgan shows us that markets tend to run in longer-term cycles of significant growth, and then grind sideways for a significant period.

 

 Market Movement Sideways Stock Market Bull Market

 

There is no doubt we’ve experienced a strong move up for over a decade and I hope it continues, however, that trend will change at some point. This is the reason we have to manage how our investments are allocated and hold other assets such as cash, bonds, commodities, real estate, etc. to help wade through the ups and downs that are inevitable. This is especially important when you start withdrawing money from your investments, such as in retirement.

 

If you’d like to discuss your investment strategy, email me at advisor@blakegallion.com

 

 

 

Advisory services offered through Arbor Point Advisors. Securities offered through Securities America Inc., Member FINRA/SIPC. Arbor Point and Securities America are separate companies. CA Insurance #0E88557

Retirement Planner in San Diego

 

Advisory services offered through Arbor Point Advisors. Securities offered through Securities America, Inc., Member FINRA/SIPC. Arbor Point Advisors and Securities America are separate companies. This site is published for residents of the United States and is for informational purposes only and does not constitute an offer to sell or solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned on this website may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced on this site are available in every state, jurisdiction or from every person listed. CA Insurance #0E88557

Advisory services offered through Arbor Point Advisors. Securities offered through Securities America, Inc., Member FINRA/SIPC. Arbor Point Advisors and Securities America are separate companies. This site is published for residents of the United States and is for informational purposes only and does not constitute an offer to sell or solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned on this website may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced on this site are available in every state, jurisdiction or from every person listed. CA Insurance #0E88557​

Rancho Bernardo Financial Planner