In this article, we will present two countervailing arguments which suggest the bull market has room to run and that it’s almost over. We aren’t going to solve where stocks are going in this article, but along the way we can make important points which add to your worldview when approaching the market.
Most People Don’t Know Much About The Bull Market
The chart below shows a Betterment survey where respondents are asked how well the S&P 500 has performed since December 2008.
Source: Axios
Remarkably, 48% said the stock market was either at the same level or down since December 2008. This is after the longest bull market in history and at a time where you can get information on anything in under a minute. The percentage of investors who thought stocks were down or flat is about in line with the percentage of people who don’t own stocks. However, only 8% were correct in this survey since the market is up over 200%. This means people who own stocks didn’t even know.
It’s important to know about past performance. You don’t need to be accurate to the nearest decimal point, but you need to compare your performance with the market. You don’t need to beat the market, but if you didn’t you need to explain why your portfolio was less risky or can outperform in the future. Understanding how great this bull run has been should motivate you to save and invest. If you check your portfolio constantly and analyze each move, take a step back and recognize how unique you are.
It’s a good idea to talk with your family or friends about their investments because they could be paying exorbitant fees and getting weak returns and not realize it because they think stocks were flat in the past 10 years. Another valuable lesson people can glean is the importance of compound annual returns. 100% may sound amazing, but in 10 years, that’s about 7.25% per year. That would be weak for a bear market coming off an over 50% collapse.
