That’s why, as a second-best alternative, I hope for something more modest: a choppy market that experiences periodic downturns, but one that trends upward for very long periods.
The Stock Market’s Movements
That is, in fact, a rough description of what the stock market has been like for the past 25 years, according to statistics provided by Howard Silverblatt, senior index analyst for S&P Dow Jones Indices. In that period, the S&P 500 has returned 552.31 percent, or 7.8 percent, annualized, but to garner those handsome returns, an investor would have had to sit tight through countless downturns.
While August has so far been a negative month for the stock market, there have been no major downturns this year. Through July, the S&P 500 rose for five consecutive months. Just seven big tech stocks — Apple, Nvidia, Microsoft, Amazon, Meta (Facebook), Tesla and Alphabet (Google) — accounted for more than two-thirds of the S&P 500’s gains.
This year, through July, the S&P 500 rose 15.9 percent, for a total return, including dividends, of 16.9 percent. Those were splendid numbers, but the market had been rising so rapidly on such a narrow base that it seemed to me that it was setting itself up for a fall.
What’s more, from a market bottom on Oct. 11, 2022, through July, the S&P 500 gained 27.9 percent, for a total return of 29.6 percent including dividends. In June, when the market had gained 20 percent from its October low, many commentators declared that the bear market that started on Jan. 3, 2022, was over, and that a new bull market had begun.