Fifteen Years Ago

James 1:2-4

2 Count it all joy, my brothers,[a] when you meet trials of various kinds, 3 for you know that the testing of your faith produces steadfastness. 4 And let steadfastness have its full effect, that you may be perfect and complete, lacking in nothing.

Fifteen years ago, marked the beginning of a recovery in the markets following the most severe economic crisis since the Great Depression. The Global Financial Crisis saw a significant loss of jobs, a halving of stock market values, and left a profound personal and psychological impact.

The GFC presented the greatest trial of investor resilience for this generation. Amid the market downturn, many well-meaning investors sold their stocks. However, every experience, whether positive or negative, offers an opportunity for reflection and improved decision-making for the future.

Reflecting on the gains since the market low in March 2009 prompts a crucial question: how much of that growth did you capture? The only way investors missed out on the full recovery was by selling during the downturn. Indeed, this was the common behavior among average investors. Yet, striving to exceed the average is our aim.

Selling during times of fear and uncertainty is often justified as seeking safety. While it may provide immediate relief, it can incur significant financial costs in the long run. Perhaps, instead of seeking safety, we should consider it as "diminishing future returns." After all, timing the market perfectly—selling at the bottom and buying back in—is nearly impossible. To reap the full benefits of market gains, one must endure the temporary losses along the journey.

Howard Marks, a revered investor and hedge fund manager, offers sage advice on capturing market gains. He emphasizes that our performance is not solely derived from buying or selling but primarily from what we hold. Thus, the key activity for long-term investors is to maintain their holdings, even amidst daunting market conditions.

In times of market turmoil and pessimism, the instinct to sell may be strong. However, the optimal strategy for long-term investors remains holding steadfast. It's undoubtedly challenging, but that's where I come in! Together, we focus our energy on weathering the occasional economic storms, enabling us to benefit from the wealth-generating potential of compound interest.

The S&P 500 Index performance from March 2009 to February 2024, including dividend reinvestment, illustrates the remarkable recovery. This index, comprising 500 stocks across various industries, serves as a barometer for the overall domestic economy. Please note that all indices mentioned are unmanaged and cannot be directly invested in.

1.      https://assets.contentstack.io/v3/assets/blt4eb669caa7dc65b2/blt79f841149f6435b0/651bdd45964d9b76a3c313b0/MTG_2023_exUS_FIN AL.pdf

 

2. https://ycharts.com/indicators/sp_500_1_year_return

 

Investment advice offered through OneAscent Financial Services, LLC, d/b/a Provident Oak Financial, LLC, a Registered Investment Adviser with the United States Securities and Exchange Commission. Registration as an investment adviser does not imply any certain degree of skill or training.