Explore Our
“Off The Wall” Blog
Unique, straight-forward, unfiltered opinion on topics of concern for individuals with newfound wealth.
Markets Do Come Back After Down Years
After a bad year, the S&P 500 rebounds 83% of the time by an average of 15%.
Why it Matters:
If you had those odds in Vegas, you’d never leave the table.
While some years are down, over time, the stock market is undefeated. Read that again.
People are booking losses in the window of time that the market is trading down due to emotional panic-selling or poor cash need planning.
To avoid those, do these two things instead:
1. Have a plan that makes you financially unbreakable by establishing a cash reserve that sits until you need it to fund your lifestyle in exchange for selling when the market is down, and:
2. Be aware of the statistics when they are in your favor.
Going Deeper: Some Stats to Be Aware Of
Here’s an important statistic that goes back to 1950:
After a down year, the S&P 500 rebounds with a positive return 15 out of 18 subsequent years with an average return of 15%.
15 out of 18 years of positive subsequent year returns is equal to 83.3%.
Want another one?
Since 1950, the third year of a presidential cycle (the year after mid-terms) is historically strong and has a track record of being positive 100% of the time. The average return of those 18 years is 14.7%. Of course, that’s no guarantee of anything – especially since the fiscal stimulus is essentially over. But still, you play the odds.
More Odds in Your Favor:
Again since 1950, the average return for the S&P 500 in years with a Democratic President, coupled with a Republican or split congress, is 17.5%. Given that the annual rate of return on the S&P 500 hovers around 10%, these are more good odds in your favor.
Update From Me (Trying to Compete with TikTok Scrollers)
I’ve decided to work on a new writing style for the blog. I’m going with a short title, a one sentence “eye-grabber”, a “why it matters” and then, a “going deeper” section for those who make it take far and want the guts of things. People have become scanners, so I’m trying a new less is more format to compete with TikTok scrollers.
Let me know if you like or dislike it.
Also, thanks to LPL Financial for the graphs and stats below – miss you all.
Keep looking forward,
David B. Armstrong, CFA
President & Co-Founder
Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“Monument”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if Monument is engaged, or continues to be engaged, to provide investment advisory services. Monument is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.
A copy of the Monument’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.monumentwealthmanagement.com/disclosures. Please Note: Monument does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Monument’s website or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your Monument account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Monument accounts; and, (3) a description of each comparative benchmark/index is available upon request.
Please Remember: If you are a Monument client, please contact Monument, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.