Stocks Just Hit an Important Milestone

It could change how you invest …

This week the market hit an important milestone (see chart below) and it captured lots of attention.

It reminded me of my time at JPMorgan during the depths of the financial crisis.

I remember it was a crisp and sunny Monday morning in March 2009 as I sat at my desk in the City offices of JPMorgan.

That weekend’s headlines were gloomy with the worsening credit crunch – and news of another bank collapsing and images of staff walking out with carboard boxes.

It felt surreal being in the office that day.  My colleagues and I were fearful about the world economy but we equally felt fortunate to have survived in our jobs.  Until 1.30pm!

Straight after lunch we were asked to gather in a large conference room.  Patrick, our global head, was there waiting on a live video link from New York.  The call lasted under 5 minutes.  He announced that senior management had decided to close down our entire division.

The news was devastating but not surprising.  I sulked a while but luckily got offered another job soon after.

But this was a classic case of market timing and sentiment following.  From an investment bank that should have known better!

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The Big Turnaround …

A few days later, on 6th March 2009, the S&P500 index reached 666.  We didn’t know at the time, but that was the low.  JPMorgan exited at the bottom!

Fast forward, the S&P500 just hit the 10x Milestone, reaching 6660 this week. That’s inflation-beating growth of almost 15% pa.

To be clear:  Global Stocks have returned even more. I used the S&P500 as it’s symbolic and was the epicentre of the crisis.

Remember:

When investing, you should not just buy the S&P.  It’s just one country (US) that also happens to have underperformed this year due to Trump’s policies and the US dollar decline.

We should always be globally diversified as i explained here about investing smarter.

From Global Crisis to 10x …

From Crisis to 10x …

This is an important symbolic milestone:  from deep existential concerns to 10x growth.

That’s 10x during a time which saw:

• Numerous debt crises
• Deep recessions
• Wars
• Global pandemic and lockdowns
• inflation at 40-year highs
• High interest rates
• Etc etc.

Despite those events, markets fully recovered every time and made multiple further new highs.

Whenever sentiment dropped, smart investors quietly accumulated quality assets at bargain prices.  Pound-cost-averaging works perfectly because stocks bounce back every time.

Why?

That’s how stockmarkets work.  Stocks have never stayed down on a permanent basis.  When capitalism survives, the economy grows and stocks have to keep going.

What if stocks decline?

Market declines are only ever temporary, never permanent.

Always remember to separate Volatility vs Permanent Loss.

With a good plan and mindset you’ll soon embrace volatility as a wealth-creation opportunity, rather than fear it.

Always Remember:

• Time in the Markets always beats timing the markets
• Stay Diversified 
• Minimise those leakages:  Fees, Inflation, and Taxes
• Financial Markets are a great source of recurring income  
• ETFs, Balanced Funds and Options achieve all the above
• Being educated helps you outperform 99% of the population

… to ensure your investments work for YOUR financial freedom (not someone else’s)     

And … 

For more guidance, our Investment Academy will help you implement all of this in a step-by-step way.   

Thousands of people have learnt how to diversify and pound-cost-average into low-cost, set-and-forget ETFs & Funds for inflation-beating growth.  And Options to create recurring income.

Click here to learn about our Investment Academy

Finally …

– Don’t take the above as advice as it may not apply to you personally

– Your Capital is at Risk

– You may not be covered by the FSCS

– Anything mentioned in a podcast or in a previous article was valid at that time and may not continue to be now