As the Thanksgiving holiday is upon us and we prepare for the awkward discussions around the dinner table, we thought it was a good time to reflect upon what we should be thankful for regarding our retirement savings. At a minimum, maybe we can provide you with some fodder to redirect the awkward political discussions into something more positive and productive.
But before we can talk about what we are thankful for, it is important to reflect back on the condition of the stock market just 12 short months ago. As a reminder, from early October 2018 through late December 2018 the stock market (S&P 500) declined by 19.9%! Technically, a Bear Market is defined by a decline in the stock market of 20% or more. I’m sorry, but this was close enough in my book! Let’s be honest, it was a brutal 50 day period and, true to form, the media helped to exacerbate the panic with headlines like this:
Candidly, it is entirely possible that you have put that whole 4th quarter 2018, and all its trappings, out of your mind but the point of this article is to highlight what you can be thankful for. Clearly, by NOT reacting to the fear and panic of late 2018 – you are (hopefully) wealthier today than you were just 12 months ago – at least as far as your blooom managed retirement account is concerned.
Since Christmas Eve 2018, the stock market is up nearly 25%. Or in other words, Santa Claus delivered quite a gift to all those investors that had the fortitude to tune out the noise of late last year, focus on their long-term goals, and stay the course. As you may know by now, this is a pretty consistent message we think is essential for our clients to hear. As many of you probably remember, here was our take then.
It’s all too easy to make bad investment decisions in times of stress that, in the moment, often seem like the next big crash or financial crisis. But it’s important to also look back and be thankful for the good decisions we make as investors, like tuning out the noise and staying focused on the long-term. These last 12 months have given us great perspective and reinforced solid investing lessons we all can be thankful for.
I’ll leave you with this – Remember that there will certainly be times in the future similar to what we experienced in late 2018. And once again, as history has always shown, staying the course and not panicking out of your portfolio is, and will continue to be, the right thing to do.
From all of us here at Blooom, Happy Thanksgiving!
Published on November 26, 2019