Now that we have your attention, let’s take a look at uncertain times and certain times. In our decades of delivering financial guidance, we can’t recall any certain times, which could make y ou think it’s even more important to know how to react to uncertainty. Here’s some of the uncertainty we’ve witnessed in the last 35 years:
1987 – Stock market crash – S&P 500 index bottoms at
1990 – Iraq invades Kuwait – S&P 500 index bottoms at 299
1991 – US in recession plus first Gulf War – S&P 500 index bottoms at 311
1994 – Bonds tumble as Fed raises rates 6 times – S&P 500 index bottoms at 441
1999 – Y2K fears grip developed world – S&P 500 index bottoms at 1212
2000 – Dot.com bubble bursts – S&P 500 index bottoms at 1265
2001 – 9/11 terrorist attacks – S&P 500 index bottoms at 965; ends year at 1161
2003 – US invades Iraq – S&P 500 index bottoms at 801; ends year at 1110
2005 – Hurricane Katrina devastates the SE US – S&P 500 bottoms at 1138
2008 – Subprime/Financial Crisis; US Recession – S&P 500 index bottoms at 752
2012 – US faces “Fiscal Cliff” – S&P index bottoms at 1277
2016 – Populists Elect Trump and Boris Johnson – S&P 500 index bottoms at 1829
2020 – Covid Pandemic; US Recession – S&P 500 index bottoms at 2237
2022 – Inflation surges – S&P 500 index bottoms at 3667
There have been countless other stories from the financial media groupthink over these years. As we write this, the S&P 500 index is currently nearly 4300. It’s important to note the prices here exclude dividends. Most of you reinvest dividends in your accounts. We make no claim that your returns have matched this index; you may have experienced better or worse returns; this is just for illustration purposes.
All the time people have spent worrying about and reacting to these and many, many other stories haven’t just cost most of them significant investment performance, but immeasurable time that could have been spent on meaningful life experiences with family and friends. As always, we remind you that your long-term, goal-focused, growth leaning bucket three is invested in approximately 800-1000 of the world’s biggest corporations. These companies did more business last year that the entire economic output of the US, operating in virtually every corner of the globe.
Sometimes newer clients don’t understand why we don’t react to the latest headlines. Over the years, we have gained experience from these events above to go along with our knowledge of investing. Information without experience is just information, not knowledge. Knowledge with experience is wisdom.