The last few months have certainly been a roller coaster ride in a macroeconomic sense but also in each of our own lives emotionally and psychologically. A steadfast mindset is the vehicle that gets us all to our financial destination, regardless of the turns, steep mountain passes, and bumps along the way.
The below chart gives perspective regarding market volatility vs. the eventual outcome of the market (the years 1983-2019 are illustrated). In green is the actual calendar year return for the S&P 500 index while the gray bar represents the low point (the % drop in the market) during that same year. For example, in 2011, the S&P 500 lost 19% at one point during the year but finished 2% positive for the year.
Intra-year declines are not unusual and historically many times have still provided positive calendar year returns.
Source SPTR Index. 2019 data through 30 Sep 19. Calendar-year returns are total returns, meaning they include the reinvestment of dividends. The S&P 500 Index is unmanaged and cannot be purchased directly by investors. Index performance show for illustrative purposes only and does not predict or depict the performance of any investment. Past performance does not guarantee future results.
It’s clear that in any given year, substantial price declines in the investment markets are a foregone conclusion, they have consistently occurred and will continue to. However, it’s remarkable how many years registered deep momentary losses but still finished positive for the year. If there ever was a numerical example of why staying the course is critical, this is it! What we have experienced in 2020 is a perfect example of this trend. The major market indices lost approximately 1/3 of their value in about a month. But fast forward a couple of months following that precipitous decline and much of those steep losses recovered. Remember the title of the visual: “Volatility does not equal loss unless you sell.”
Our team remains grounded in fundamentals and unbiased data, both give us the confidence in being optimistic, looking ahead despite the uncertainties we face. We will continue to be here for you as an objective voice of reason above the noise and emotion.
Have a fantastic week and a great Fourth of July weekend!
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. The S&P 500 Index is an unmanaged index of 500 stocks that is generally representative of the performance of larger companies in the U.S. Please note an investor cannot invest directly in an index. 3126580 dofu 06/2020
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.