Good morning & happy Monday!
The stock market is the only market where things go on sale and all the customers run out of the store.
Cullen Roche, financial author
The primary function of financial journalism seems to be terrifying us out of ever achieving our financial goals by investing in equities. We have been reminded hourly of this great truth since the S&P 500 officially entered “bear market territory” 2 weeks ago today (June 13, 2022) by closing 20% below its previous all-time high.
The equity market has done this, by my count, about one year in five since the end of World War II. (The S&P 500 has been negative 16 years in last 76 years from 1946-2021 = 21.05% – slickcharts.com/sp500/returns). This is not an earth-shattering, life-altering occurrence … it’s quite simply just investing.
Every bear market has its unique precipitating causes. This one seems to be primarily driven by inflationary fears.
Neither I, nor anyone else, can predict when, where or how this bear market will bottom out. We can only observe the historical fact that sooner or later, they all have.
As long-term, goal-focused investors, we are given a choice: to be guided by the totality of the historical record, or by today’s catastrophist headlines.
I choose history. I assert my belief that “this time” is not, in fact, different.
Capitulation to a bear market has most often turned out to be a tragedy, from which many investors’ financial (and especially retirement) plans never recover.
My mission continues: not to insulate you from short-term to intermediate-term volatility, but to minimize your long-term regret. The best way I know to do that is by encouraging you to stay the course.
My friends, stay the course, stick to the plan. As always, I’m here to help.
Due to the 4th of July next Monday, I will not be sending out a Monday morning memo next week. Have a wonderful Independence Day!