Think about these dates. What was going on in your life on these dates?
Check this list of end-of-day values out of the S&P 500 Index:
December 30, 1994 459.27
March 1, 1996 645.38
July 1, 2000 1,470.38
February 1, 2003 838.47
May 1, 2007 1,320.17
December 30,2008 890.64
March 20, 2009 768.54
January 1, 2013 1,493.54
What is the foundational link for all of these? If you were 40 in 1996, you began what some call “prime years.” The market roared until it didn’t. Remember the tech bubble? Early 2003, perhaps, you were dismayed while looking at your retirement plan statement. Certainly justified!
But Wait, There’s More! Along comes 2008 and 2009 with the FINANCIAL CRISIS. Again, the untended equity portfolio gave up almost 50% in less than five months. This one hit you hard since you had made a habit of checking your work and other accounts regularly to see how you were progressing. Truth is, this was a crisis and put us on a brink of a depression that would have rivaled 1929. Even the papers declared that remember? What was Wall Street saying as you were fidgeting in your seat? “You are well diversified...buying and holding is the right thing for long-term investors...stock markets have always outperformed others.”
Then you turned 57 in 2013, maybe breathing a bit easier, and were looking for that golden day of retiring. Think of what happened over time in your work 401(k)...did you get in, then out when facing these market events? Probably not, right? Since 1995 we have been on a roller coaster ride that has been uplifting and crushing. Investment gurus told you that and followed with “You’re well diversified...!” or “Over the long haul, the markets always give you the best returns!” Math will quickly tell you, over the time in this important period in your life had you just invested in equities (say S&P 500) and held on (like Wall Street would have you do Dec.30. 1994 to Dec 31, 2013) you probably averaged about 7.6% per year in hindsight. This did improve a bit by mid-year 2020 to 8.99% over the whole period. Here is the rub. Your emotions, no doubt. ran hot but you had time on your side, right? Staying the course, as they say however, informs us about the ride. This chart is what your annual returns look like, perhaps corresponding with your emotional delight/disappointment:
Now once again, we are faced with events affecting both life and investments. The year 2020 was expected to be the year that could bring modest returns and perhaps a mild recession as a national election played out. No one could have imagined a complete shutdown of the economy. While the markets have given back a lot of what was taken from equity investors on March 23, 2020, and we are much closer to returning to where we think we were back in January, volatility still reigns. Sure, it is troubling since most did not know whether to cut and run, standstill, or raise the stakes. Reality is however... the one thing you cannot get back is TIME. That thought is contributing to your serious desire for growth now; and the investment markets are giving you no alternatives. Who wants a 10-year Treasury Note at below 1%? The stock market still appears to be the only game in town. That simply means YOU MUST CHANGE HOW YOU INVEST. The question you have is HOW!
Below is a link to INVESTING HAS CHANGED; TIME TO CHANGE THE GAME PLAN. Just click to view or download securely. This white paper is based on research of our emotions, decision strategies, and how to create a solid foundation supporting your goals...it is time for your game now.
Wondering how this all applies to you?
Indices mentioned are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results.
 Ferguson, W. G. (2020). Stock Market Today: March 23, 2020. Value Line: https://www.valueline.com/Markets/Daily_Updates/Stock_Market_Today__March_23,_2020.aspx#.Xv9HNyhKiw4
 CNBC.com, March 9, 2020
 CNBC.com, February 8, 2018
 CNBC.com, October 10, 2018
 CNBC.com, December 25, 2018
MarketWatch (2020) Data retrieved: https://www.marketwatch.com/investing/index/spx?mod=home-page, July 2, 2020.
deSilva, Peter, TD Ameritrade, President of Retail. https://s2.q4cdn.com/437609071/files/doc_news/research/2018
Engen, E. M. & Lehnerth A. (2000). Mutual Funds and the U.S. Equity Markets. Federal Reserve Bulletin: Retrieved from https://www.federalreserve.gov/pubs/bulletin/2000/1200lead.pdf
Hockey, Tim (2018. (2018) The Tech Effect: How the Digital Age Is Changing Investing. Note, President/CEO Tim Hockey of TD Ameritrade. https://s2.q4cdn.com/437609071/files/doc_news/research/2018/TDA_FinTech_ebook.pdf
Rudden, J. (2020). Share of households owning mutual funds in the U.S. 1980-2019