#1. Don’t Wait for a Correction
A person who invested $100 in the S&P 500 in 1960 and never sold would now have $43,132. An investor who employed a “buy the dips” strategy of buying in 1960, selling at new all-time highs, and waiting for a 10% correction before buying back, would have just $534.
#2. How the Mighty Have Fallen
In September 2000, General Electric was the world’s largest company, valued at almost $600 billion. Now, 21 years later, its value is $113 billion, about an 80% drop. What we’d always hear back then: “Just put your money in GE. It’s in so many different industries, it’s like a mutual fund.” Hmmm….
#3. Move Over, Beanie Babies
The first speculative bubble wasn’t in stocks, but in tulip bulbs in Europe. The bubble peaked in 1637, when some bulbs sold for more than ten times the yearly wage of a skilled craftsman. The prices dropped precipitously soon after.
#4. Need a Little Patience
The market hit a new all-time high on Monday. That means no matter when you invested previously, regardless of how bad the economy, the market, or the world may have seemed at the time, if you had simply held on, you’d have made money.
#5. Not to Beat a Dead Horse, But…
From 1950 to 2019 on average, “corrections”, or pullbacks of 10%+, happened about once per year and lasted 112 days. “Crashes”, or pullbacks of 20%+, happened about once every six years and lasted 401 days. If that worries you, see #4.
Have a great Summer!
John, Bill, Mark & Melanie