Happy belated Valentine's Day! I hope that whomever you spent your day with, whether spouse, friend, family, or four legged friend, that your day was filled with love.
In CURO News:
Looking at the market day-to-day may be leaving you with an uneasy pit in your stomach. I'd like to take a few moments to offer my perspective and hopefully ease your mind.
Market volatility tends to awaken the fight or flight response in investors, each person’s response depends on their outlook. As the market moves, some investors approach with a “glass-half-full” point of view, where “Stocks are on sale! I can buy more shares for less!”. While others view it as a sign of more turbulent times ahead and prefer to abandon ship. It’s natural to be concerned when the markets are turbulent, as no one enjoys uncertainty—especially when it comes to their investments. However, another perspective allows this to become an opportunity.
No matter where you sit on the spectrum of emotions, there are a few facts that may ease your mind. For example, since its inception (in 1926) the average annualized return of the S&P 500 Index through 2021 is 10.5%. If you look back across what’s nearly a century— data proves that following steep broad market declines, stocks provided strong returns over the one-, three- and five-year periods. This is not to say that volatility isn’t something to fear, but rather that it’s a natural market function and sticking with your investment plan puts you in the best position to reap the benefits of an impending recovery.
Now, while that may momentarily ease your mind, the inevitable thoughts push through of the other headlines circulating: “inflation rates spiking” and the Fed’s potential to raise interest rates, all intermingled with labor and supply chain shortages and a healthy dose of COVID-19. All of these things, while they may be true, create noise. Noise is made up of all of the negative and positive things going on in our world that can impact the stock market. There will always be noise.
What we hold onto as planners, is history. History often repeats itself, and the fact remains that the average annualized return of the S&P 500 since inception, has been greater than 10%. Does that mean that this time could be different? Sure. Does that mean that this time will be any different? Probably not.
Volatility does not indicate the long-term pathway of the stock market, it’s the price of earning more on your investments overtime. We must remember that turbulence is not an indicator of the plane going down, just bad weather and funky wind patterns on the long journey to our destination.
Until next time, wishing you health, wealth, and happiness.
Marianna
