A look at the recent 20% panic-inducing dip in the market that truly manifested itself in the season of Advent to Easter…
December 2, 2018. Advent begins. Market grumblings are nigh as SPX has already shed 5% from its all-time high in September. We begin the Holy Season with darkness and fear in the market. Those who have missed the record gains of the past 10 years certainly have no intention of beginning their investing now. It’s far too dangerous. Those who have enjoyed the market’s gains are heeding the true message of the season – get out now, the market’s record bull run is over, recession has begun…
December 23, 2018. Christmastide begins. The Star of Bethlehem illuminates bloodshed on Wall St. SPX is down 20% as pundits struggle to point to the cause. One thing is certain, a recession is nigh along with a bear market. Money that has been on the sidelines is paralyzed on the sidelines. Money that has been in the market has been withdrawn, seeking safety. Merry Christmas, your $1.00 is now worth $0.80…
February 14, 2019. Lent. A time to commemorate wandering and fasting, yet the market is feasting. We’re up 16% from the massacre on Christmas Eve. Pundits struggle to find reason for the sudden increase. They are still struggling to place blame for the recent decline. Those who sought safety may be wondering why. Those frozen on the sidelines are kicking themselves once again. The market ebbs and the market flows.
March 29, 2019. Maundy Thursday. Lent ends and the market has added another 3% leading into the Easter season. I know some people still recovering from Mardi Gras. It’s taken them longer to get upright than SPX, that’s for sure. We’re back to where we were in November before the bloodshed began. It is evident now that this was just another market anomaly. Oh ye of little faith…
April 23, 2019. We’re a few days past Easter. SPX sits at 2,934, besting its all time high last seen in late September, 2018. GDP rose from 2.2% at Christmas to 3.2% at Easter. It’s sad to talk to both those who fled and those who stayed away from the market. What did Cramer have to say? Did Maddow shoot you straight?
The fall lasted from September 20 to December 24. It took only 95 days for the market to drop 20%. The return to Glory lasted from December 24 to April 23. It took only 120 days for the market to return to, and exceed, its 2018 peak.
What happened in that time? Let’s take a look…
For me, the chart above represents what you hear and read about the market via mainstream media. It makes no sense, it’s choppy and unpredictable. And those following it on a daily basis will never know where they sit on the timeline relative to its beginning and end.
The chart above is more indicative of what a true investor sees over the last 6 months. In the time of fear, panic, decline and recovery the true investor had little to worry about. He is well diversified, properly allocated, and investing regularly.
Allocation & Diversification
I made decent money from Advent to Easter on my emerging market stocks and my bonds. I saw a slight gain across my large caps and I lost a little bit on on my small caps and international stocks. Since I invest weekly I caught the market’s dip all the way down, buying more shares as they got cheaper. I also caught the rise in its entirety, buying fewer shares as they got more expensive.
During the entire event I ate Halloween candy in peace, turkey without fear, candy canes absent worry, black-eyed peas without trepidation, king cake sans grief, and chocolate Easter bunnies with no regret.
You can’t time these types of market blips. If you’re in the market you’re in the market. If you’re not in the market there’s no perfect time to get in, just get in. No you won’t time it perfectly. Yes you will see losses at some point, but you’ll see gains as well. Automate your investments to capitalize on the volatility. Buy weekly, monthly, or quarterly to capture the markets movements as a whole.
If you’re properly invested and allocated, the last six months were a non-event. In the same fashion, next six months are no cause for concern. Thoughts?