Two months ago we highlighted the fact that the 3 major equity indices, the S&P 500, the Dow Jones, and the Nasdaq Composite, have all hovered around all-time highs in 2016. Simultaneously, equity capital markets are experiencing the highest levels of outflows of capital since the 2007 Great Recession of yore. With the stock market reaching all-time highs, and many investors fleeing the market, one could conclude the investment world might be applying some Preparation H and bracing for a nice old bear market gang bang.
The stock market has been in a 7-year bull market and it just might be time that things take a turn for the worse. In fact, you could read up on a smorgasbord of economic pundits predicting that a bear market / recession is imminent here, here, here, and here. And yeah, they very well may be right.
But here’s the thing…. does it really fucking matter?
Peep this chart bruh:
As you can see, the S&P Index has steadily grown in size and returns since the early 1900’s. The S&P has consistently grown in the face of a multitude of recessions for a hundred years. From economic down turns, to global political conflicts, the S&P don’t fear that shit.
The only time in which the S&P kinda sorta let investors down was following the Stock Market Crash of 1929 and the ensuing Great Depression. The Great Depression resulted in the sharpest decline in the equity index over the last +100 years. Additionally, the recovery following America’s worst economic downturn also took the longest for investors to regain their money (approximately 25 years, or a quarter century… yikes).
Basically, if your money wasn’t invested in the equity markets until after 1950, you gucci as fuck.
Peep this other fun chart depicting other global events that the S&P 500 has endured through (via Naresh Nambisan):
Moral of the story: don’t overreact to bearish/troubling economic news. Equity indexes have survived a shitload of global events and developments for years, and since long before you or I even walked this earth.
And you know it boy.