Dougherty Dispatch-More Pain Ahead?

Hang in there!  As the market continues to rock and roll we find ourselves taking the step backward that I’ve talked about before. We enjoyed the two steps forward for the last few years and now we must hold on tight as we move in the other direction. 

After the S&P index of the five hundred largest companies increased 18% in 2020 and another 28% last year, it is now down 14% from its high so far this year, with more predicted drops to come as the Fed raises rates and world economic growth slows. Tech stocks are down even more, but they also had bigger gains in the last couple years. 

During the last 20 years, we had one year wherethe market was up 32%, and another year where it was  down 37%. The average up and down volatility is about 15% per year, but the average annual growth over the same time has managed to be consistent with historical returns:  10.5. 

The idea of selling out at this time puts us in the unstable position to have to predict the timing of the turnaround—which nobody can do without a lot of luck, but will come at some point because it always has. 

But it still may be too early to go bargain hunting.  

These days, instead of watching the markets, it may be better to watch a good movie. 

John D