Retire While You Work® Podcast
Join us as we discuss various topics to help you find the path to viewing money as a means to the true currency, TIME, and learn how to build more memories and experiences.
View All EpisodesJoin us as we discuss various topics to help you find the path to viewing money as a means to the true currency, TIME, and learn how to build more memories and experiences.
View All EpisodesWhat if you could do what you're passionate about and achieve a work-life balance? What if you were relieved of the pressure to have some massive amount saved?
Learn MoreWhat a year this has been. It seems like more has happened this year than in the past five years. First there was the talk of the trade deal with China, remember that? Then, before we knew it, COVID-19 was upon us and the global economy was sent into a downward spiral. In the U.S., the Dow Jones fell over 35% in just 23 trading days. Its partner in crime, the S&P 500, almost 34% in the same amount of time. We were all left scratching our heads wondering where this came from. Should we have seen this coming? Maybe, but that is not so clear either. The data we were receiving out of China was “cloudy”, filled with mixed information that was hard to decipher. Looking back at some of the past pandemics and taking notes from those maybe we could have had a better idea, but then again hindsight is always 20/20 and in the past things never got as bad as medical personnel said it would.
Where are we now? From the lows of March 23rd through the end of the second quarter the Dow Jones is up over 37% and the S&P 500 is also up nearly 37%. Again, I think most of us are scratching our heads wondering how the recovery of the market stormed back like it did. While the market was quick to bounce back, there is still a long way to go. Unemployment is still at some of the highest levels we have ever seen, COVID-19 cases are climbing everyday (although deaths are down), and parts of the economy are still close to a halt. Which makes some wonder how the market came back like it did. It is important to remember that the market trades on the future, not the past, and each day it considers all the world events and moves from there. Market highs or market lows mean nothing to the market. All the market knows is that it goes up when times are looking good and down when times look bad. I think this is important to remember. Just because the market is at a high does not mean it cannot keep climbing and vice versa on the downside. History has proven it is nearly impossible to time the market because it is too unpredictable. Average returns for investors who try to time the market are close to 2% – not much better than a good CD. Average returns for investors who stay invested are close to 7% – and it is far less work and stress than trying to time things.
What’s next? Well, now that we have passed the Jumanji-esk levels of the Murder Hornets and the Saharan Dust Storm, we are hoping for a quiet ride in the second half of the year. That is until November when the Presidential Election comes around. You didn’t forget about that did you? But, in all seriousness, politics aside, who gets into the Oval office or who doesn’t get in doesn’t play nearly the role that all assume it does. Markets have performed well under both parties. Over the past 75 years under both Democratic and Republican administrations the S&P 500 has returned 11% averaged annually and the U.S. economy also expanded around 3% annually during that time. The stock market’s return was negative for a presidential administration only when the country was in a financial crisis (2008) or experiencing a stagflationary period (1979). Neither party can lay claim to superior economic or financial market performance.
Although this 4th of July is going to look quite a bit different for all of us, enjoy the time with your loved ones or those close around you and be thankful for your health. In the end, it is not about the money and the things, it is about the memories and experiences with those around you.
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