Where Does the Market Go From Here?

To date the S&P 500 is down roughly 20% for the year. The market has been relatively choppy this year. It has opened down and remained down, but we have seen two bear rallies. Those bear rallies have proven to be false hope and the market has sunk even lower.

Where Do We Go From Here?

While past returns never indicate future success what we can do is use history as a comparison.

The chart below is the annual returns of the S&P 500 from the start of the century until close of business on 10/14/22.

This chart shows the growth in the S&P 500 over the last 274 months. Annual returns are noted by the orange dots.

There have been three times that the S&P 500 has closed down 20% or more over this time. The previous two times a drop of this magnitude happened were 2002 and 2008. Had you bought in at those points you would have bought in at a bull market that lasted 5 and 14 years before the next 20% drop.

My Message To You

What is going on in this market is normal. As investors we need to be prepared for these types of pullbacks. While they are never fun, they should not change your investment outlook.

If you have a financial advisor a pullback of this magnitude should have been modeled into your financial plans.

Based off the chart above, it also looks likely that expected future returns are increasing. Meaning that this pullback is an opportunity to enter the market at a lower price point and see better growth.

While I do not have a crystal ball and know where exactly this market will bounce the final time, I do know that this is a much more attractive entry point than where we have been the past few years.

I would welcome an opportunity to chat with you more about how this could affect you.

As always if you have any questions or want to review your financial situation, please contact me here and subscribe.