When thoughts turn to beaches, beer, barbecues and baseball over the three-day Holiday weekend, it’s easy to lose sight of what Memorial Day is all about. We’ve retail-ized the last weekend in May into the official “kickoff to summer” celebration. In reality, we’re supposed to be honoring U.S. military personnel who have died serving in the armed forces. Let’s keep that in mind before we get too wrapped up in our social/shopping plans and cursing the sky high gas prices and traffic we’re enduring.
Speaking of perspective, suppose you had a recently retired client couple who finally took that round-the-world trip they’ve been planning for years. Let’s say they departed on Memorial Day 2021 and just came back this weekend, having not checked the news or the Internet during their lengthy sojourn. Looking at their financial statements for the first time in a year, it would probably elicit a yawn, not fear.
How can that be? Check out the chart below: Memorial Day weekend 2021 the S&P 500 was at 4,204. After the close of markets Friday, the S&P was essentially the same: 4,158.
As recently as two weeks ago, this headline came across my newsfeed from a reliable source: The S&P 500 is having its worst year so far in six decades. But, despite all the fear, anxiety and anger these screaming headlines provoke, the markets really haven’t moved much in the big picture. The S&P is essentially unchanged over the past 12 months. What’s more, it’s up a respectable 51% over the past three years (Memorial Day 2019) and up a healthy 72% over the past five years (Memorial Day 2017).
Last week the market danced around bear market territory, defined as a 20% or greater decline from a recent market peak. According to Dimensional Fund Advisors data, there have been at least 15 separate times over the past century when stocks have plummeted 20% or more after setting a recent high. On average, the markets have gained 69.9% five years after hitting bottom. Not too bad.
No one can honestly predict what the next six, twelve or twenty-four months will bring, nor can they explain with confidence how we got to where we are today. Sure, all the doom and gloom predictions about rates hikes, inflation and a recession will be painful in the short-term, but we always find a way to get through those headwinds.
Here’s a prediction from your favorite marathon-running editor: “Slow and steady always wins the race.”
Keep the faith. If you or someone close to you is in the military, we sincerely thank you for your service.
Enjoy your Holiday weekend.
Best, Hank B
Don’t agree? Tell me why.