For a stretch there from April 2020 until January of this year, any schmuck with an E-Trade account could make money in the stock market. It was very easy for people to get the impression that they were an investing genius thanks to what was probably the hottest market in my lifetime carrying the freight. Since January, though, there seems to be a whole lot of people who are confounded that the market can move down as well as up.
I’ve got my own records going back to 2003. Looking at the charts, I can see clearly at least three other “big” down periods – 2008, 2015, and early 2020. The rest is slow, steady, upwards progress. Something about time in the market versus timing the market, I suppose. Looking at my May report, I can see I’m down a little more than 12% year to date. Sure, I’d be happier if it were 12% up for the year so far, but nothing I’m seeing feels like cause for panic. Pulling the charts back to look at the 5-, 10-, or 20-year trends tells me the important part of the tale.
Before long, I expect we’ll increasingly see stories about people bailing out – “fleeing to safety” – in some alternative investment. From where I’m sitting, panic decisions are just about the worst thing anyone could do to themselves. Over a long enough horizon, despite every historic crash, dip, and period of stagnation, U.S. markets have never gone down and stayed down. Past performance is no guarantee of future results, of course, so maybe “this time it really is different.” I doubt it.
So, yeah, I’m 12% down. From where I’m sitting, it’s mostly a shrug and a so what. With at least 13 years to run before I could need a nickel of those funds, why wouldn’t I want to buy today at a solid discount to what I was spending on January 1st? If I were planning to retire on May 31st 2022 instead of 2035, I’d probably be more worried. If I had pulled the trigger and gone off into retirement at the beginning of the year, I’d probably be horrified at what it means for my sequence of returns… but I also wouldn’t have started that adventure all in on index funds instead of shepherding my lot into dividend payers, bonds, and allocations designed to preserve capital rather than chase growth.
The wider universe is going to do whatever it’s going to do. Our politics will swing between the extremes. Climate will continue to shift. There will be great breakthroughs and horrendous failures. Through it all, I’ll be over here quietly buying a little every week, planning for the best case and not-so-best-case future, and doing my level best to make Fortress Jeff my own haven in a turbulent world. As far as I’m concerned, reports of the end of history and impending financial doomsday have been greatly exaggerated. Through it all, there’s very little new under the sun.