The S&P has fallen 21% from December 31st, 2021, through Friday, October 21st, 2022. At first glance that decline is troubling. However, let’s look at some perspective on this. Over the past 5 years, the S&P has grown from 2569 on October 24, 2017, to 3752 on October 21st, 2022, or 46% (about 8% annualized). That number does not include dividends, adding another 1-2% to the total return. Not a bad five-year return even with the recent market decline. *
The S&P ended 2019 at 3230 ( a 28% increase for the year), dropped nearly 31% during Covid to 2237 in March of 2020, and ended the year at 3756 (a 16% increase for the year). Quite a roller coaster.
Then the market exploded upward from 3756 at the end of 2020 to finish 2021 at 4766 for a gain of 26%. This gain was primarily driven by the rise in the price of 10 stocks in the S&P. One could easily argue that these gains were not real, and the market might correct. And it did in 2022. It felt like an early Christmas in 2021 and then the Grinch took back all the presents in 2022.
Therefore, if one looks at the past five years, we have done very well in the market, even with the roller coaster ride. While giving back all the artificial market gains from 2021 does not feel good, the market longer term has been rewarding.
As corporate profits continue to rise over time, so should the market.
Yahoo! Finance 10/24/2022
You have been through these market declines in the past and we will get through this one too. We are committed to you and your financial future.
Please call us to discuss any market concerns.
*Yahoo! Finance October 24th, 2022
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