Go Read!

Go read this article over at the blog "A Wealth of Common Sense," "Regression to Lumpy Returns".  It points out something that I think it is very important for investors to understand and that is that stock market returns are not constant.  They are all over the board.  A positive year can just as easily lead to losses the next.  A large part of that has to do with the fact that stocks are long dated instruments and while humans care about returns on a yearly basis, markets do not.  The main take-aways from the article are shown below.  {Highlights mine.}

-The worst 5-year total return since World War II occurred between 2004 and the spring of 2009 with a loss of 29% or annualized loss of around 6.6%.  If the S&P 500 lost 30% of its value over the coming five years, the annual return from 2009-2022 would still be 6.8% per year.  That's far better than you could have received from more fixed return oriented investments during the same period but obviously without the same volatility.

-Missing a bull market can be more detrimental to your long term financial health that taking part in a bear market.

-Stock market performance is lumpy.  This should be obvious to anybody who's been at this for a longer period of time but needs to be constantly drilled home to investors.  After a year like 2017 it is very easy to assume markets will always perform just like that and things will be rosy forever.  They won't be.

At any rate a pretty good article and one I suggest everybody go read in full.

Posting schedule:  I've mentioned a couple of times that I will be moving my office at the end of the month and that will necessitate a more limited posting schedule.  I plan to post 2-3 times a week this week and next.  After that through the end of May I will only commit to one posting a week.  We'll figure out what the schedule is going to be over the summer as I have a better feel on my time commitments at that time.  Back Wednesday and Thursday this week.

Long ETFs related to the S&P 500 in client and personal accounts.  Short S&P 500 in a personal account as part of a separate individual strategy.