I’m pretty sure we’ve been in quarantine too long because now we’re constructing our own graphs! We have two things to share with you. The first is a long-standing visual that JP Morgan provides each year. It uses the S&P 500 as a proxy to illustrate how impactful missing just a few of the best days over the last 20 years could be. As you’ll see below, missing the 10 best days would have meant a nearly two-thirds reduction in return for the time beginning January 4, 1999 and ending December 31, 2018. Missing the best 20 days resulted in the return over two full decades being negative.
This first graph is a long standing visual that JP Morgan provides each year. It uses the S&P 500 as a proxy to illustrate how impactful missing just a few of the best days over the last 20 years could be. As you can see, missing the 10 best days would have meant a nearly two-thirds reduction in return for the time period beginning January 4, 1999 and ending December 31, 2018. Missing the best 20 days resulted in the return over two full decades being negative.
The second is the graph we constructed. One interesting observation about bear markets is they have many good days along the way. We generally think the market goes down for a while and then collects itself emotionally at the bottom. We assume it gives everyone a breather and some time to reflect on where things stand…and then resumes its upward climb. This couldn’t be farther from the truth.
The best days almost always follow very closely to the worst days. We went back to February 19, 2020 (the day the music died ) and graphed each day’s percentage change in the markets¹ since. It’s almost unreal to see the percentage change each day. Yes, those are days, not years! We took the additional step of boxing in the really bad days that were immediately followed by the really good ones.
This second graph we (Strategic Financial Partners) constructed. An interesting observation about bear markets is that they have many good days along the way.
The best days almost always follow very closely to the worst days. We went back to February 19, 2020 and graphed each day’s percentage change in the markets¹ since. It’s almost unreal to see the percentage change each day. Yes, those are days and not years! We took the additional step of boxing in the really bad days that were immediately followed by the really good ones.
Try timing that! Now, we know you are good long-term investors and we are pleased to share that we’ve not had a single client change abrupt course due to the market madness. But we are all human. Perhaps we all are asking ourselves the following questions:
Here are a few things we know from experience that help to address these mental debates:
We hope these observations prove useful as we all fight daily for perspective.
Regards,
Joel D. Malick AIF® AWMA®
Strategic Financial Partners
Registered Representative/Investment Advisory Representative, Securian Financial Services, Inc., Securities Dealer, Member FINRA/SIPC, A Registered Investment Advisor. Strategic Financial Partners is independently owned and operated. CA insurance license number: 0E42461
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any funds or stocks in particular, nor should it be construed as a recommendation to purchase or sell a security. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 3023837 DOFU 04/2020
1-Yahoo Finance Historical Data, ticker ^GSPC Feb 19th to April 3rd
2-https://www.fidelity.com/viewpoints/market-and-economic-insights/bear-markets-the-business-cycle-explained
Joel Malick currently maintains the Accredited Investment Fiduciary (AIF®) and Accredited Wealth Management Advisor (AWMA®) designations. Joel and his team at Strategic Financial Partners recognize that running this race for the long term is one of the greatest challenges you’ll face in your lifetime. Thus, they combine critical planning and investment strategies with real-life perspectives. Their consultation is provided at no additional cost to 403(b) Alliance Retirement Plan participants.