This is a quote that I’ve used before, and to me, it’s appropriate as we start the 4th quarter of the year.
Normally I like to talk about everything BUT the markets and the economy in my semi-annual letter. I leave that stuff up to Brandon Masbruch, our Chief Investment Officer, and his quarterly newsletter. But I think maybe I should at least chime in on my observations and feelings a bit as I know it may be on many of your minds.
In some regards, you could argue the economy isn’t that bad. Unemployment is low. Wages for workers are slowly growing.
The amount of assets held in banks is at historic highs. Many of us are healthy and largely recovered from the pandemic. We have good homes, with low mortgage rates. Schools are open. The holidays are approaching. And if we look backwards at the stocks markets in the US (as measured by the SP500), recently they provided us the following results:
-up 27% in 2021
-up 16% in 2020
-up 29% in 2019
That’s a good run! You know, if you didn’t turn on the news today you might be able to blissfully enjoy the world around you!
But, then there’s the other ‘stuff’ that’s been in the backdrop of the first 9 months of 2022 –War, inflation, recession, elevated oil prices, upcoming elections, rising interest rates, volatile stock market values, and the like. The list could go on, but I’ll spare you. In other words, there are many headwinds in front of us and unfortunately, the path for getting through them may not be easy. It can be hard as an investor, or just as a human being, to not be driven down to the point of exhaustion from the negativity. That’s normal, it’s OK to feel that way, and we all share in that from time to time.
But as I mentioned, the last three years in the markets have been great. And, truth be told, 11 of the last 13 years dating back to 2009, the markets have been positive!
However, all of that occurred AFTER the markets went down as far as 49% in 2008.
Remember that? Seems like forever ago that our economy was crashing, banks were folding, people were losing their jobs
and their homes, and the world was in disarray... it didn’t feel like there were any ‘best of times’ back then.
In fact, on March 9, 2009, the SP500 bottomed at the level 676. (For reference – two years earlier the SP500 traded around 1,500 – so things were cut in half.)
If on that day, I asked you how you felt, and what you thought
about the next year (or beyond) would bring in the economy and stock markets, I bet your answer wouldn’t have been very positive. And that would have been an understandable answer, but it would have been also incredibly incorrect.
That year paved the way to all the wonderful things the market and economy held in store following it.
Even today, as I write this on the afternoon of 9/27/22, amid an already occurring BEAR MARKET, the SP500 is valued at 3,633.
Which means from that bottom of 2009, in the subsequent years that followed, the market is up over 400%.
(Also, for reference, the low of the pandemic, March 16, 2020, the SP500 closed at 2,386. That was 30 months ago. Which means as of the time of writing this, we’re up over 50% since then.)
That’s the thing, no one knows when the tide begins to turn, and the recovery begins to start – until after it has. No one knows what will spark it, but something always has. Like they say, it’s always darkest before the dawn.
