Consider how resilient the market has been over the past 10 years.
In the last quarterly newsletter, I wrote about the benefits of time in the market and, conversely, the perils of missing the most successful, unpredictably timed, individual positive days in the market. Simply stated it is “time in the market” that trumps “timing the market” when seeking long term investing success. (see, BWFA Advisor magazine, April 2017, “When’s the Right Time to Invest?”).
Let’s consider how resilient the market has been throughout its most recent 10 years of success. In fact, the broader stock market has virtually doubled from January 2008 to the first Quarter of this year, 2017.
Each year presented its own crises, some more “major” than others. Some of these events are noted below in order to provide some perspective as to how easily an investor could have been scared out of this incredible bull market. Beginning in early 2008 and working chronologically through to the first quarter of this year, here goes:
2008
- Federal Reserve arranges takeover of Bear Stearns by JP Morgan
- Lehman Brothers files for bankruptcy protection
- Congress passes TARP (Troubled Assets Relief Program)
2009
- Barrack H. Obama sworn in as 44th President of the U.S.
- $787 billion U.S. stimulus bill signed
- H1N1 virus “global pandemic”
- Dubai credit crisis shakes global markets
2010
- Haiti Earthquake
- Obama signs healthcare bill
- End of QE 1
- Flash Crash
- Obama signs Dodd-Frank law
- U.S. Debt Crisis imminent
- EU and IMF bailout of Ireland
2011
- Meredith Whitney predicts municipal bond troubles
- Japan earthquake
- Portugal receives bailout
- Euro zone to impose tighter fiscal control over members
- S&P downgrades U.S. debt rating to AA+
- End of QE2
2012
- Eurozone finance ministers approve second bailout for Greece
- Hurricane Sandy hits New Jersey
- N. Korea confirms successful testing of nuclear device
2013
- With the edge of Fiscal Cliff in sight, still no deal
- Boston Marathon Bombing
- Detroit, Michigan files for Bankruptcy
- Partial U.S. federal government shutdown
- Ebola outbreak in West Africa
2014
- QE 3 tapering begins
- Russia moves troops into Crimea
- U.S Real GDP growth in Q1 2014 falls at a 2.1% annual rate
- ISIS begins offensive in Iraq
- Oil price collapse begins
- Argentina defaults on its debts
- QE 3 ends
2015
- Swiss de-pegging from the Euro
- U.S. Real GDP growth in Q1 falls at a 0.2% annual rate
- California has worst drought in history
- U.S. Supreme Court affirms “Obamacare”
- Chinese stock market crashes
- Russia launches air strikes in Syria
2016
- Brexit vote passes
- OPEC announces production cut
- Donald J. Trump elected 45th President of the United States U.S. fed funds rate hiked to 0.75%
2017
- Bull market in stocks turns 8 years old (2nd longest)
- U.S. Fed hikes rates 25 basis points
BWFA seeks to achieve competitive long term investment results for our investment management clients by not overreacting to the myriad “challenging” events that occur and that are piped in to our homes on a daily basis by the media outlets. We urge our clients to do the same.
Despite all these negative “real news” events, investing prudently in the proper allocations and sectors as well as the strongest companies, over time, can produce effective long term results for your investment dollars. In real world terms, this translates to the long term investing success (and the dollars behind them) that our clients can count on to achieve their goals and dreams, especially of retiring well.
So, as we undoubtedly will be met with similar “bad news” in the future, regardless of who is in the Oval Office, let us put it all into context and remember that wealth is generated over time with prudent active management and a disciplined, unemotional reaction to all the “noise” that inevitably surrounds us all.