Pathlight President, Adrian Larson, discusses stock market returns 10 years after the generational stock market bottom caused by the Great Recession.
An Anniversary to Remember, Even if We’d Like to Forget!
March 6, 2019 marked the 10-year anniversary of the bottom in the S&P 500 which was caused by the Great Recession and subsequent worst financial crisis since the Great Depression. While the pain of 2009 still feels very fresh to many market participants, one might be shocked to find out that the 10-year annualized return of the S&P 500 since that generational low of 666 has been 17.8%.
Additionally, the S&P 500 is up roughly 77% from the October 2007 high, even with the 57% decline from peak to trough.
The More Things Change…
We point out this anniversary not to relive the pain, but really to reinforce the teachable moment. Although from day to day financial markets may seem erratic and insane, over the long-term, value is eventually rewarded by higher prices. It has happened over and over again throughout history.
To illustrate this point, the return over the last 10 years post the March 2009 low lines up very well with other stock market crashes. The 10-year annualized returns after the October ’87 crash were 17.2% and after the August ’82 low were 17.6%.
Best Start to a Year in 13 years
The anniversary of the 2009 low coincides with our recent bout of market weakness. The S&P 500 fell by 19.6% from October 3, 2018 through December 24, 2018, but has since rebounded by roughly 18% through March 6, 2019. Additionally, the S&P is having its strongest start to a year in the last 13 years.
What this lesson continues to tell us is, stay the course, don’t panic, believe in your plan, and you are likely to be rewarded over the long-term.
Take a Long-Term View
In times like these it is of the utmost importance that you feel comfortable about your long term financial plan. You must be sure that your investments are aligned with your goals and risk tolerance. That is what allows you to weather the short-term problems and ultimately build the wealth you need in retirement. If you’re concerned, check-in with your Advisor and on your financial plan. If you don’t have a plan, there is no better time to build one, because you don’t buy an umbrella for sunny days.
Head over to the myPATH page to take a tour of Pathlight’s personalized financial planning platform and start down your path today.
If you’re interested in learning ways to prepare for market weakness, you can download our free report Lessons for the Next Crisis
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