CNBC reported today: Here are all the reasons why Monday’s major market wreck is happening.
Show of hands, who finds this helpful?
Backdrop
Today is Monday, August 5, 2024. The S&P 500 is down 3.25% today. This is after heavy losses both on Thursday and Friday of last week.
Here’s Why This Makes Me Angry
I follow CNBC every day, and at no time last week do I recall them posting a headline warning of an imminent pullback in the market – sell your shares now!
It’s as if they are the experts, they knew this was coming and now they are reminding us that we should have known.
First of all, the market flashes warning signs all the time. There is always something to worry about – high valuations for example. Valuations were high in 2010 as the market recovered from the 2008 disaster. Valuations continued to rise for 8 years or so until a small pull-back in 2018. High valuations are a data point but not an indicator of some impending event.
As investors we take risks. No one knows for sure what will happen tomorrow or the next day, or even next year. We do however know that the S&P 500 has averaged a 10% annual return with dividends reinvested since the 1920’s. We also know that there is no guarantee that money invested today will be worth more in a year. However, there is no 20 year period in which an investment in the S&P 500 has lost value.
Stay the Course
As investors we understand there will be volatility. There will be a pull back of 10% or more every 2 years or so. But in the long run, the S&P 500 has a winning track record.
I’m Still Angry
All that said, I’m still angry. This article doesn’t make anyone feel good about investing. Why couldn’t they say “The S&P 500 remains up over 8% year to date despite this past week’s turbulence.” ?
I hope you take this CNBC article in the spirit it was meant. It was meant to grab our attention and get us to read. Well done. But it should not discourage us from investing for the long-run, and especially, it should not make anyone feel like the experts knew this was coming. They didn’t.