Below is a flashback to our FZ Daily from mid-year 2022.
You might remember that 2022 sucked for the markets. Inflation hit 8%, and by October, the S&P 500 was down 25%. Eek!
I only failed talking one FZ Member off the ledge, otherwise I got everyone else rode it out.
And from those October lows? The S&P has more than doubled. Yay!
The New Panic
But these days, for the first time in my career, I’m having trouble talking people off a very different ledge.
Everyone is talking about the impending doom of AI bubbles bursting, stagflation traps, and private credit collapsing.
Meanwhile, we’re up 15% this year. We were up 17% last year. Up 25% in 2024. And up 25% in 2023.
“But that’s too much! It’s TOO GOOD! Winter always comes eventually!”
You’re damn right. Winter will 100% arrive at our doorstep… at some point.
The question is: how many summers are you going to let pass by while you hide behind the curtains hoarding firewood?
The Rip Van Winkle Strategy
Could we be headed for another 2022 or even another 2008? Maybe.
And what should we do about it? Stay invested. Period.
As you can see from my blog four years ago, the “experts” had been calling for a recession for 5 years prior to the drop and missed out on a 60% total returns.
Even after 2022, if they had stayed invested, they still would have been up 50%.
And today they’d be up 214% through it all.
Downturns happen. And?…
Here is what I wrote back then:
FZ Daily from 6/3/2022:
We’re down 10% in just the last week!
We’re down 18% year-to-date!
Surely NOW it’s time to freak out, right? RIGHT!?!?
Nah.
Let’s jump in our DeLorean and go back to June 2017.
If I told you back then that you’d earn a 9.85% annual return on your money over the next 5 years, would you have been happy?
Probably so.
Well guess what!? Even after all the nastiness of this year, that’s EXACTLY what you’ve gotten from the S&P 500 over the last 5 years.
Sometimes the best investment strategy is the Rip Van Winkle strategy.
Invest it right, set up automatic rebalancing with an automated investment program, and only check in every 5 years.