After a devastating decline in the stock market in the final quarter of 2018, 2019 turned into the 2nd best year, at least for the S&P 500, we’ve had since 1997. The total return for that index came in at 31.49% growth. And while I don’t have the total return figures for the Dow, NASDAQ and the Russell 2000 yet, even without the dividends figured in they still returned 22.34%, 35.24% and 23.65% respectively.
This Bull Market we are in started on March 10th, 2009. Here we are 10 years and 10 months later. It would seem that a Bull this old (this IS the longest one in history), that he’d be getting very tired and slowing way down. But that doesn’t seem to be the case.
In my job I read numerous articles regarding the stock market and the way the writer thinks it will go. They always have their own (and in most cases, very good) reasoning for why they are making their predictions the way they are. Those who believe we are at the top of the market cite statistics that point to why the market should decline. Those who believe this Bull has some room to run tend to cite different statistics. One thing I ALWAYS try to keep in mind is why are they predicting what they are predicting. Do they have a financial or political stake in their predictions?
Being a student of human psychology I know that when our opinions are biased one way or the other we tend to readily accept other opinions or statistics that agree with our already held beliefs, and we tend to dismiss those opinions and statistics that don’t. The only way I have found to discover any hidden biases of the people whose opinions I read is to read them consistently. That way I can slowly determine whether or not they are looking at market information objectively, or if they’re tilting it.
One of the reasons I started my radio broadcast is that so much of the information offered each week by the other so called advisors on the radio was nothing but thinly veiled sales presentations. I heard a 30 second spot for one of those shows just the other day in which the advisor said, “they tell you the market is going up, but then it just goes down.” Really? The product he is selling has a history of providing a 2 to 4 percent annual return. The year just ended saw a 30+% increase in the S&P 500. Do you know how long it would take one of those financial instruments those other radio guys are selling to make what you could have made in the S&P 500 just last year? Seven years. That’s right. It would take someone seven years of investing in those other products JUST to equal what he would have made last year in an S&P 500 index fund.
So I decided to start a radio broadcast where people could go for real information. I want people to know that the stock market is not a scary place, if you understand what it’s doing. You know from the start it will go up and it will go down. It always has. You know that the more knowledge you have about any subject, the less scary it becomes.
That goes for the stock market, too. If someone comes on the radio and is constantly telling you how bad something is, after a while you tend to believe it. You probably haven’t even considered the fact that they themselves know practically nothing about stocks or the stock market, and that they have a financial incentive to scare the bejeebers out of you. If they can scare you sufficiently enough, and they can make themselves out to be the person who can save your retirement, and be the hero, then you just may take all your retirement money to them so they can make a big commission and tie your retirement assets up in a high surrender product for ten years or longer. That does happen folks. Otherwise they would not be paying for radio time each week and forever talking about how bad the stock market is.
The stock market is not a perfect place for every dollar you may have. But for the dollars you’re not going to be using for a long time, a well-diversified portfolio of stocks and maybe some bonds that are constantly monitored by a professional could give you a return that people who invest in interest-bearing accounts could only dream about.