I started investing square in the middle of the decade, in April of 2015. We were already about six years into a fabulous bull market for stocks, and many people doubted it would continue. Yet continue it has, to this day.
As the above chart shows, investing in U.S. stocks over the last ten years has been a whizz-bang good idea (FYI, here’s a link to the original page from macrotrends.net). The S&P 500 hovered at near 1,000 at the beginning of 2010 (1,132.99, to be exact), while this year it is finishing just above 3,200 (3,221.29).
Yes, you read that right: basically, it tripled in 10 years!
Needless to say, the last ten years have been pretty cushy if you are a growth-oriented investor (ie wanting those prices to rise). As for myself, when I started investing, the S&P 500 was roughly at 2050. It has grown by over 50% since then.
Not too shabby.
Now before you and I get out the champagne (assuming you also were able to take advantage of this incredible period of growth), recall that this ten year period followed one of the worst downturns in the modern area (and perhaps the worst since the Great Depression).
2008 sucked the big one. And we should not forget that such things can be part of the territory of investing (and for that matter, being alive, since everyone, investor or no, was impacted by the financial crisis).
If there is anything that I am learning about the economic cycle, it is that periods of expansion tend to be followed by periods of contraction, followed by more expansion, followed by some contraction, so on and so on (if you’re interested, there’s a great video here on the subject). In the long run, the trend is up–yet it may be a bumpy ride!
This year I have tried to be honest with myself about how much risk I really want to take. Although I have sometimes gotten very much in my head about this (oops), I have made some rather moderate defensive moves that put a little bit more of our portfolio into bonds while still taking advantage of the bull for as long as it lasts.
We shall see how it shapes up. I’m looking forward to it!
Side note: Happy New Year! G’Bye 2019, g’bye The Teens, Hello the “20s!”
Side note #2: This post completes my December 2019 blogging. The goal was to post four times per week. I accomplished this, and I have some mixed thoughts on it: in some ways, it was nice, because it gave me time to plan out what my blog posts would be, instead of always having to post that day; on the other hand, sometimes I felt a bit disconnected from the project because I had several days off. It was like leaving the car off in the garage too long. There was something nice about revving the motors every day for the 365 Day Blog 🙂
I shall take off New Years Day from blogging and decide what I want to do for January 2020. I am considering trying out a weekly blog post…
Meanwhile, Happy New Year!