Tuesday, January 2, 2018

14 out of 15 is not bad; it is great!

Every year, I try to give you a scorecard on how the stock market is doing from an investment standpoint. Based on the chart below, the Standard and Poor’s index of 500 stocks has now been up 14 out of the last 15 years. Every day, I am confronted by cynics in the stock market that just cannot believe that the market is real and goes up every year. However, the chart below absolutely proves without exception that if you intend to retire on an income similar to the one you earned during your working years, you must be invested in assets that appreciate like the stock market. As reflected in the chart below, if you had invested $10,000 on January 1, 2003, at the end of December 31, 2017, your investment would be worth $41,309. You do not have to be a rocket scientist to calculate that your original investment of $10,000 was up a cool 313%.

Over and over again, I meet with potential clients who sold all of their investments in 2008 and never reinvested. Their reasons for not reinvesting vary, but almost none of them reflect economic reality. Basically, this chart says that if you had invested in the S&P 500 Index in 2003 and had done nothing whatsoever with your investments, including during the 2008 correction, you would be 313% better for having done so.

I doubt there is a clearer advertisement for investing going forward than the chart above. We are not even talking about actively managed investments here; this is just a passive index of the 500 largest corporations in America. It does not include international investing or even emerging markets, which has the potential in 2018 to be a very strong performer. My goal for sharing this chart is to provide you with information that will allow you to evaluate your investments going forward.

I am sure that you are anxious to hear my year-end evaluation of the stock market and my projections for 2018 but, unfortunately, you will have to wait another 24 hours to read all about it. In the meantime, if you have any questions regarding the numbers reflected in the chart above, please let me know.

As always, the foregoing includes my opinions, assumptions and forecasts. It is perfectly possible that I am wrong.

Best Regards,
Joe Rollins