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Taylor Schulte

Markets that go nowhere

Published about 1 year ago • 2 min read

Hi Reader,

On January 4th of 2022, the S&P 500 peaked at 4,818.

Four months later, the index dropped over 800 points and closed at 3,987.

For the first time during this bear market cycle, it was clear that inflation was a threat and the Fed was putting the screws to our economy.

In today's email, I'm sharing how frustrated retirement investors might deal with flat markets.

Let's dive in!

Markets That Go Nowhere

During a traditional bear market, most of us will grit our teeth and exercise faith until we reach the other side.

But since May, the markets have just bounced around the 4,000 mark.

In other words, we're closing in on nine months of the market doing basically nothing.

The one market that frustrates all retirement investors equally is a market that goes nowhere.

It's like we're driving 'round and 'round in a large traffic circle.

We're putting miles on the car without actually getting anywhere.

It's not fun for anyone.  

When the market goes nowhere and our statements show "up, down, up, down, up, down" for months (or years!) at a time, it's demoralizing.

Because what's the point?!

Gritting our teeth and looking toward the future doesn't seem to help...

...although that's exactly what we should be doing.

To encourage you in that regard, I want to remind you that we've seen this movie before.

As frustrating as the last nine months have been, there have been times when this traffic-circle-type market has played out over 10+ years.

For example, the 1970s and the 2000s.

With reference to the 70s, it's been said that the people who made the most money in the 80s and 90s were the investors who dollar-cost-averaged through the 70s.

This is relatively intuitive as I'll explain using the more recent 2000s as a brief example.

Investors who kept buying through the flat decade of the 2000s—which includes two of the three worst bear markets in U.S. history—likely ended up doing pretty well if they stuck with it.

For perspective, the bear market of the early 2000s reached as low as 776 and the bottom of the '07-'09 bear market reached an even lower low of 676.

Frustration = Opportunity

Today, the S&P is bouncing around 4,000.

In other words, the market is up almost six times since 2009, NOT including dividends.

I'll admit it is a frustrating experience.

But we know that with investing, frustration is often synonymous with opportunity.

Because just as we look back at prices from decades past as obvious buying opportunities...

...it's likely that we'll look back at this period as having been a great opportunity to invest.

We have to believe that, eventually, the market will work out the kinks and move on to new highs again.

Our job is simply to stay the course.  

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Stay wealthy,

Taylor Schulte, CFP®

Taylor Schulte

Retirement and tax planning tips...in plain English.

I'm the host of the Stay Wealthy Retirement Show and founder of Define Financial, an award-winning retirement and tax planning firm. When I’m not helping people lower their tax bill, you can find me traveling with my wife and kids, searching for the next best carne asada burrito, or trying to master Adam Scott’s golf swing.

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