When The Dust Settles
In my recent webinar (click here if you missed it and want to register for the replay) I was trying to explain how there is a huge disconnect between what the economy does and what the stock market does. The economy is in tatters and the stock market just posted it’s best month since 1987. As I said in my recent blog post, it doesn’t seem to make any sense. It’s baffling people all over the world.
Intuitively, given the crazy world we live in today, it would seem that one should “wait for the dust to settle” before investing in the stock market. I hear this phrase from people a lot. “I know I need to invest, but now really doesn’t seem like a good time. I think I’ll just wait for the dust to settle.”
Well, if there’s one thing to know about investing it’s that it is incredibly counter-intuitive. The thing you most think you should do is often the exact opposite of what you actually should do.
Whilst researching for my webinar I came across an article by Morgan Housel from 2013 that put the preceding five year period in context via a series of headlines. It highlights the point I have been trying to make PERFECTLY.
Here are a selection of headlines from 2009 and early 2010.
Source: Morgan Housel
The world was a mess. A real mess. The dust had not settled. And it wasn’t really clear even five years later than the dust had settled.
Meanwhile on March 6th 2009 (the date of the second headline above) the S&P 500 bottomed at 666.79 (on an intra-day basis). By the time GM filed for bankruptcy on June 1st 2009, the S&P 500 had surged 41%. By the time foreclosures hit a record high on January 14th 2010, the S&P 500 had risen 72% from its March 2009 bottom.*
Still people were waiting for the dust to settle.
As Georg Hegel once said “The only thing we learn from history is that we learn nothing from history.”
Please remember - I always offer a virtual coffee (or wine) and a second opinion for any of you reading my newsletters who are not already clients.
Georgie
georgie@libertywealth.ky
*Here’s a little secret (in a whisper) - you don’t want to miss out on a 72% rise.