Is the worst over when it comes to the stock market? Investing experts seem to think so, at least in as it pertains to the S&P 500, the index that monitors the performance of the U.S.’s largest 500 publicly-traded companies.
Currently, investors are looking at this stabilization as a positive sign – even when the current data is anything but. In 2020, the S&P reached a high on February 19, but about a month later had dipped by 34 percent from this high. At the time of this writing, it’s down about 17 percent from this February 2020 high and about 20 percent for the year.
Overall, it’s going to be a down year for your portfolio – but it’s likely not going to be a crippling year for it. Let’s take a look at what experts are predicting:
What to Expect from 2020
Over the past century, market returns have averaged about 10 percent per year. However, this isn’t exactly a measure of sustained year-over-year growth. There are ebbs and flows along the way.
So for example, one year the return might be 15 percent and the next year the return might be flat – it typically averages out to 10 percent over a 100-year period.
So, where will 2020 end up when it comes to the S&P? Most experts think it will be in the range of -10 percent to a best case scenario of zero. And while this may not seem like great news, keep in mind that at the start of the great recession in 2008, the S&P ended the year at -38.5 percent.
It’s a Marathon, Not a Sprint
It’s cliche, but as an investor you need to remember that investing is a long-term game. And over the course of your investment journey, it’s going to get rocky at times. It’s important to remember this and it’s also important to diversify how you grow your wealth. In other words, your stock portfolio should just be one aspect of your overall strategy.
The current market can present particular advantages for young investors who are just now dabbling in things, as you can take advantage of lower prices and formulate a long-term investing strategy that will ideally see your shares increase in value over time. The markets are going to come back, it’s just a matter of when. Buying stocks at low prices now can potentially set young investors up very well in the long term – even if you don’t make any money this year.
It Could Be MUCH Worse
We’ve always urged caution and patience as it pertains to the stock market. While it’s easy to make knee-jerk decisions during times of economic turmoil, these decisions may not end up being the best for you or your wealth building strategy in the long term.
Yes, it’s going to be a down year, but when you put this “down year” into perspective on what experts are predicting based on other historically poor years, there’s hope for a faster rebound.
Featured Image by Alpha Stock Images
