Long-time TGIF 2 Minutes readers know that “The Greatest Chart Ever” truly is a great chart* with data illustrating reasons to invest – and stay invested – in stocks for the short-, intermediate- and especially the long-term. The chart focuses on US stocks, namely the S&P 500, and lends to globally diversified stock investing as well.
At Main Street Financial Solutions, the takeaways from “The Greatest Chart Ever” keep getting better. This year one of my greatest adviser colleagues ever (thank you, Ken Paul) provided, from a new source, an additional chart of “60 Years Of Stock Market Cycles”**. Not boring! Quite the opposite – and encouraging for stock investors and savers overall.
The prime takeaways, since 1963, of the 60-Year Chart are two:
- The average return of bull markets has been +151.6% while the average bear market decline has been -34.2%.
- Notably, the average time frame for a bull market has been 51.0 months while the average duration of a bear market has been 11.1 months.
At most basic, this data emphasizes long-term, diversified investing – and patience. If an investor can stick around for the 11.1 months on average for a bear market and through an average annual decline of 14.3%, healthy growth of a portfolio over the longer-lasting bull markets has time to take place. Our lifetimes for investing are in the years, not months: think, 10, 20 and 30 years and longer.
These are thoughts to keep in mind going into 2024 with both risks and potential for growth on the horizon.
*Source: JPMorgan Guide to the Markets. FactSet, Standard & Poor’s, J.P. Morgan Asset Management.
**Source: Dorothy Neufeld, Sabrina Lam; Visual Capitalist. FirstTrust Advisors LP., Bloomberg.
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied upon for, tax, legal or accounting advice.
Thank you for reading, Happy 2024 and TGIF!