Get comfortable as I wind the clock back to March 3, 2009, when the stock market, measured by the S&P 500, bottomed and the 2008-2009 stock market debacle was over.
Since then, the stock market has gained a whopping 334 percent (total return) and set 151 record closing highs through July 14, 2017. This equates to a 19.2 percent annual return!
Of course, the market's recovery was not straight up. In fact, we witnessed a boatload of gut-wrenching declines during the past eight years or so, as we climbed the proverbial wall of worry. Those of us that stayed the course in spite of the “head-for-the-hills" doomsayers screaming “Armageddon” probably weathered the fiasco just fine.
There will always be the nattering nabobs of negativism calling for another stock market crash. One does not have to be educated in stock market analysis to understand that nobody, and I mean nobody, knows the direction of the stock market. It is a loser’s game.
Nevertheless, until we invent a cure for the human tendency to flee the stock market in panic, the Wall Street graveyard will continue to overflow with cadavers of those who allowed their emotions to get the best of them. To my chagrin, I am unfairly accused as a being a “perma-bull” and/or a “pie in the sky” optimist. Nothing could be further from the truth. I am a realist, not on optimist.
Nonetheless, I get it that many peeps simply cannot shake the memory of the stock market crash of 2008-2009, as it was a painful and frustrating time in our lives. It was downright scary and remarkably disturbing. Frankly, I do not blame people for wanting to hit the panic switch, as it is in our DNA to act accordingly, especially when the chicken littles are out in force and the bears, on cue, are yelling, “I told you so.”
Furthermore, I understand the temptation to believe the Armageddon scenario, but I encourage you not to listen to the chatter. Pay no attention to the voices of doom and gloom. Just “fuhgeddaboudit!” No matter how tough it gets, we must not give in. Instead, we must dig in!
The fact of the matter is that periodic crises are inevitable, but a recovery has historically followed. Heck, if we are looking for a reason to be worried about stocks, there are plenty of headlines right now to light our fuse.
Sure, there will be a time when we witness another recession, and stocks will underperform once again. In fact, we could witness a stock market crash that pales in comparison to the 2008-2009 mess.
Bubbles and busts have been happening since the dawn of financial markets, and I suggest that they will continue to happen going forward. Therefore, when (not if) it happens, instead of worry or hitting the panic button, let’s say, “It’s about time. Bring it on!” In other words, let’s be ready “mentally” for the next decline. Let’s not try to duck the inevitable. Instead, let us meet the next stock market adversity head on, as we know that history tells us that a recovery always happens and stocks move higher.
I suggest that we follow the words of wisdom from the legendary Warren Buffet who said in his 2015 annual letter, "For 240 years it is a terrible mistake to bet against America, and now is no time to start.” Let’s relax and stop overthinking what the market will do in the future.
Harry Pappas Jr. CFP®
Master of Science Degree Personal Financial Planning
Certified Estate & Trust Specialist ™
Certified Divorce Financial Analyst™
Pappas Wealth Management Group of Wells Fargo Advisors
818 North Highway A1A, Ste 200
Ponte Vedra, Florida 32082
The use of the CDFA™ designation does not permit Wells Fargo Advisors or its Financial Advisors to provide legal advice, nor is it meant to imply that the firm or its associates are acting as experts in this field.
Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member SIPC, a Registered Broker-Dealer and a non-bank affiliate of Wells Fargo & Company.
This and/or the accompanying statistical information was prepared by or obtained from sources that Wells Fargo Advisors believes to be reliable, but its accuracy is not guaranteed. The report herein is not a complete analysis of every material fact in respect to any company, industry or security. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Any market prices are only indications of market values and are subject to change. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.