The Long Term Investor

A little early morning post.

Why investors are grappling with a ‘fear of heights’ in 2024 — and what 98 years of history tells us

https://nypost.com/2024/03/25/busin...n-2024-and-what-98-years-of-history-tells-us/

(BOLD is my opinion OR what I consider important content)

"Feeling acrophobic?

After the S&P 500’s 26% return last year and this year’s strong start, many investors are worried – understandably – that this bull run is getting ahead of itself.

They shouldn’t. The strange-but-true fact is that, statistically speaking, average returns — which have amounted to about 10% a year over nearly a century of trading — aren’t normal in the stock market for any given year. A second, surprisingly pleasant fact is that so-called “extreme” returns are far closer to what we’d call normal — and they’re mostly on the positive side.

Most folks think of volatility as negativity. We all recognize the NYSE’s famously frazzled-looking floor trader, Peter Tuchman, peering up at the Big Board in various states of alarm, with the effect enhanced by his Einstein-style shock of white hair.

Crucially, that image – however familiar, convincing and relatable it may be – is misleading. Volatility is just movement, whether it’s up or down.

Crunching the numbers, one finds that stocks rise far more often than they fall. Forget the day-to-day or month-to month noise. Since accurate data start in 1925, the S&P 500 gained in fully 73% of rolling 12-month periods – nearly three-quarters of them! Stretched to rolling five-year periods that becomes 88%. Across 10-year periods, it’s a staggering 94.5%.

Meanwhile, throughout that entire, 98-year stretch, there has never been a rolling 20-year period of negative returns. Never.

To work this into your bones a little further, consider that since 1925, US stocks gained more than 20% in 37 of 98 calendar years — the most frequent result! Next most frequent? Zero to 20% gains, totaling 35 times. Down between 0% and -20% followed, at 20 years.

Down big was the real rarity, occurring just six times. So, markets posted huge gains six times as often as horrendous declines.

More simply: Stocks beat their 10% long-term average in 58 calendar years. They fell — to any degree — less than half as often, 26 times. So historically, you are more than twice as likely to celebrate above-average, even huge, years than encounter down years.

Looking back at the past five years, many folks – again, understandably – fixate on 2022’s negativity, calling that “volatile.” OK! But what of all the great volatility during 2019’s 31.5% boom? Or 2021’s 28.7%? And, of course, 2023. All four years are extremes.

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Since 1925, the S&P 500 gained in fully 73% of rolling 12-month periods.
Even 2020, starting dreadfully amid COVID’s lockdown-driven hyper-fast bear market, finished up 18.4%. I hesitate labeling anything in 2020 normal. But ironically, its 18% return is the closest to average among those years.

The upshot? Big returns simply aren’t the rarity that “too far, too fast” bears claim. In bull markets, they are more normal than not. Why? The roughly 10% long-term annual average includes bear markets. Strip out the bears and you’ll find that during the 14 S&P 500 bull markets before this one, stocks annualized 23%.

Mind you, I’m not necessarily suggesting 2024 returns exceeding 20%. But it wouldn’t shock me — and it shouldn’t shock you. The fact is, gains of 20% and more aren’t abnormal at all.

As for acrophobia, I can’t disagree with a fear of hot-air balloons, mountain climbing, or a job washing windows at the Empire State Building – but try to get over it when it comes to investing.

MY COMMENT

YEP...nothing to see here except for the media going crazy as usual and doing their normal fear-mongering. YES.....a few big name stocks are up by exceptional numbers....but in any bull market there are always market leaders. AND....the leaders now will not necessarily be the leaders by year end. (But I would not bet against it).

As to the broad markets.....the SP500 is UP by about +10.66% year to date. That is a pretty good gain....but not uncommon at all for the first three months of a year.

SO.....enjoy the ride......and make all you can while you can.

 

As to the above......remember:

The FED is done.

Rate cuts are on the horizan....probably two or three.

The economy is in a very sweet spot with growth in the "perfect" 3-4% range.

Consumers are spending money.

Wages continue to go up although at a slower pace.

Earnings continue to come in nicely each quarter.

The companies that are BOOMING are the leaders of the economy not some sort of "meme" stocks.

The pandemic is FULLY over along with all the distortions and disruptions....finally.

There is STILL $6TRILLION siting on the sidelines as investors continue to mull what to do.

There is not real indication of Exuberance, rational or irrational.

As a long term investor I love the positioning that all of the above creates for the markets......and....I will continue in the markets for the long term as usual

 

AND.....in spite of all the scary and insane headlines.....THIS is the TRUTH.

The S&P 500 is up 5 months straight — and history favors momentum

https://finance.yahoo.com/news/the-...t--and-history-favors-momentum-100025041.html

(BOLD is my opinion OR what I consider important content)

"Since October, stocks have climbed the wall of worry and closed each month in the green — brushing aside concerns over inflation, recession, corporate earnings, Fed hiking, Fed easing, and the like. Barring disaster, Friday's settlement will extend this winning streak to five months.

Over this brief period, the S&P 500 has rocketed 25% higher, leading reasonable investors to question if the market has moved too far too quickly.

History answers resoundingly once again for those who would question the trending potential of the US stock market: Strength begets strength.

Since 1950, there have been 30 five-month streaks in the S&P 500, including the most recent one, along with another streak that ended last July. In all but two of the prior 28 cases, the S&P 500 was higher 12 months later, with an average gain of 12.5% and a 93% win rate. This compares to a 9.0% average one-year return with a 74% win rate.

The bullish advantage decreases over shorter time frames, but critically, it doesn't disappear.

Looking one month out following a five-month streak, the average historical return is 1.0% with a 76% win rate — versus a 0.7% average gain and 61% win rate over all one-month periods in the last 74 years.

And, as we've been writing, gains are increasingly broad-based, with the rally extending beyond anything tangentially related to artificial intelligence.

Investors might be surprised to learn that over the last five months, the financial sector is the best-performing large-cap sector, up 28%.

Tech is close behind with a 27% return, followed closely by industrials, up 26%. Notwithstanding the barrage of AI headlines, large-cap industrials have notched 27 record closing highs over the last five months versus tech's 25 all-time records.

Throw in the materials, communications, and consumer discretionary sectors, and fully six of the 11 S&P 500 sectors are up 20% or more over five months.

Our large-cap discussion here doesn't even touch on the risk-on tilt being felt elsewhere in the markets — from crypto to disruption stocks to IPOs.

Less than one week after its initial public offering, Reddit (RDDT) has nearly doubled in price — up 91.5%. That's not nothing either."

MY COMMENT

AND....what do I care anyway. I am a long term investor. I will take any gain in the markets I can get. Otherwise I simply sit fully invested. It is not like I am trying to somehow time an exit from the markets.

SO.....I have NOTHING to worry about....or....to be nervous about..... and nothing to do other than sit, watch the fun......especially all the negative CARPING by the market manipulators and click-baiters. When it all ends, it will end, and we will move on to whatever the markets have in store for us.

BUT...one thing that I know is true.....over the long term the markets WILL be positive about 70% of all years. I will take that PROBABILITY all day long.....for life. AND....if I invest in the cream of the crop.....I will do just fine.

 

As a HD owner.....sounds good to me.

Home Depot is acquiring specialty distributor SRS for $18.25 billion in huge bet on growing pro sales

https://www.cnbc.com/2024/03/28/hom...-for-18point25-billion-to-grow-pro-sales.html

 

As to the week.....well as of the close today my entire account is at +23.70% year to date. Last Friday I was at.....+25.27% year to date for my entire account.

We are seeing a little bit of FLAILING AROUND in the big cap tech names lately. Nothing wrong with that.....we need to rest up and go through a bit of consolidation of the year to date gains. You cant force it.....you have to simply let the markets do their thing.......and......wait for it.

So a LOSING week for me this week.

ONWARD AND UPWARD.......TO INFINITY AND BEYOND.

We start a new week and a new month on Monday.

HAVE A GREAT WEEKEND EVERYONE.

 

As for today.....my stocks had a small loss and I also got beat by the SP500 by 0.28%.

BUMMER.