To many of you, it probably depends on the day. The longest running bull market of history is starting to feel stress and show signs of running out of steam at times. As December roars in, we are hoping to have a positive month among the blessings of Advent. As we consider our blessings and our worry, we all need to remember the fundamentals of the stock market and a famous quote by Warrant Buffet, “the only value of stock forecasters is to make fortunetellers look good.” Many of the experts that push one view will be back on the news next week telling you why that view did not work. It pays in times of extremes to look at longer periods of history.
From 1980 until 2015, the S&P 500 Index fell on average 14.2% at least at one point each year. In that 36 year span the market finished in positive territory 27 times. So, when the next bear market shows up, you have to remember that bears become bulls. Most of the funds at Moravian Ministries Foundation in America are invested with a long-term time horizon so we have to remain focused on growth over the span of years versus nerves when we have drops. I know that is hard to do.
Timing the market is very hard and is simply not something we do at our foundation. We advocate staying fully invested and maintaining your asset allocation. According to a recent Marketwatch publication, the S&P 500 had a total annualized return of 8.2% from 1996-2015. If you take out the top 10 days of return, the total return drops to 4.5%. If you exclude the top 20 days, the return drops to 2.1%. It gets worse as you go. You see, staying on the sidelines can harm your portfolio more than being fully invested.
Down days cause stress and certainly down months cause even more. There are blinking lights on the horizon that need to be watched closely. Trade is one big item and what happens in our 90-day period with the US and China could be key to future growth. The Fed acting to quickly or not acting can also be something to watch. The other signs point to positive returns when you look at items like employment, corporate profits, and expectations. We are positioning our portfolios for more defense as we move into the next few months but we still maintain full investment and exposure that is diversified so opportunities are capitalized whether the market moves up or down. If you have any questions about your investments, please call Chris Spaugh at 888-722-7923 or email Chris at firstname.lastname@example.org.
Have a blessed Advent Season and Merry Christmas!