To suggest that the so-called “experts” out there don’t have a clue what is going to happen in the future would be a gross understatement. Year end brings all the gurus out of the woodwork.

As we close out 2022, there may be temptation to guess what happens next and make changes to your portfolio as a result.  Resist the urge. Stick to your plan.  Your portfolio is built for all seasons.

We would laugh about this and poke fun at the many pundits and articles if we weren’t certain that people out there will read, listen and take action that could be severely detrimental to their investing future.

Consecutive down years are rare for US stocks, so after this year’s drop, there’s only a low probability they will decline again in 2023. Yet if they do, history shows that investors will have to brace for another very unpleasant 12 months.

Since 1928, the S&P 500 Index has only fallen for two straight years on four occasions: The Great Depression, World War II, the 1970s oil crisis and the bursting of the dot-com bubble at the start of this century.

In the benchmark’s almost 100-year history, such occasions are clear outliers. Yet when they occurred, drops in the second year have always been deeper than in the first, with an average decline of 24%. That would exceed this year’s slide of about 20% to date.

More than two back-to-back years in the red are even rarer. The S&P 500 tumbled for three straight years from 2000 to 2002 and from 1939 to 1941, while the longest losing streak remains the aftermath of the infamous Wall Street crash, when stocks fell for four years from 1929 to 1932.

A muted recovery, at best, for the S&P 500 next year is probably as far as we should go based on history. Recessions do not always doom equities and markets tend to bottom out before a recession starts. Hopefully the S&P 500 saw its bottom in June during peak inflation.

I want to also remind you this is why we diversify into other asset classes other than the S & P 500. Your portfolio holds 10-30% in the S & P 500. Although this is significant you have cushion in other important asset classes that will serve you well over the long term. We have become a bit spoiled with great returns and if history repeats itself the returns will return soon.

If you are feeling a little anxious or need a pep talk click the link button below and I will reach out to you or you can call us at (304) 375-3843.