Just as you thought the stock market couldn't possibly throw any more surprises at you, the S&P 500 (US stock market) literally just notched up a 100% return from it's March 2020 low. In fact, the doubling of the S&P 500 just took 353 days, the fastest the market had doubled since World War II. A couple of other fun facts:
Year to date, the S&P 500 has closed at an All Time High (ATH) 51 times during 2021, and its on track to break the last record set in 1995.
The last time the stock market experienced a decline of 5% or more was in October 2020. Since 1929, the S&P 500 has experienced a nine-month streak like this only 12 other times.
As of 30 June 2021, only 15 stocks had outperformed the S&P 500 index. According to my calculations, it could be the lowest on record. The year before, 40 stocks outperformed the index, and in 2019, 68. For perspective, in 1995, 246 companies outperformed the index.
Here's the S&P 500 index doubling from 23 March 2020 to today - it certainly wasn't a smooth ride, with some bumps along the way.
Given the significant rally in prices, pundits are calling for a correction, and they're probably right.
It's tough to make predictions, especially about the future. - Yogi Berra
Have you ever wondered a casino floor, specifically, the roulette tables and have seen the dealer spinning red, red, red, red, red, red, consistently red. And I'm sure you've thought to yourself, surely the next spin must be black. And you probably even placed a bet, to be shocked that the next spin is in fact, again, red. And you continue to bet on black - again, and again, against the momentum of the dealer.
You see, each and every spin in an independent variable. It is not influenced by the previous spin - as much as we try and look for patterns, draw parallels or conclusions. The stock market is the same. What happened yesterday, last year, or last time we saw something similar has absolutely no influence on tomorrow's return.
Investors should spend more time on designing personalised portfolios. Portfolios that support their time horizon. Their income needs. Their financial priorities. If you're worried about the stock market falling 30-40%, then you probably have too much money in the stock market. The stock market is right more often than it is wrong - trust your process.