Worry About Your Investments? How Often?
I don’t suppose it’s ever a good idea to worry about anything. If there’s something in your life that you feel needs changing, and you have the ability to change it, then do so. If you have no control over it, worrying about it won’t help anything and might even negatively impact your health. Nowhere is this more relevant than with your investments. The following data might help you put worrying into a different perspective.
Bob Seawright, CIO of Madison Avenue Securities in San Diego, wrote recently in his blog that on a daily basis, the S&P 500 increased only 53% of the time over the last 20 years. So if you’re a news junkie and strive to catch that stock market report every day, you are going to be disappointed on average almost every other day.
Maybe the answer is not to look at the market quite so frequently. The website Seeking Alpha analyzed weekly returns from 1962 through 2017 and found that on average 56% of the time the S&P 500 increased for the week. That’s certainly an improvement over 53%.
Then we have Yardeni Research’s analysis of historical monthly and yearly returns. Going back to 1928, the number of months in which the S&P 500 has ended positive grows to 59%. And on an annual basis during this same period, the S&P 500 has had positive returns more than 67% of the time. That should not come as a surprise considering that the stock market over the long run has outpaced the growth in our country’s GDP. And why not? The reason we invest in the first place is to participate in the growing valuations of companies contributing to a robust capitalistic economy.
To be fair, to those of you who demand scientific rigor I admit the comparisons above span different time periods, and confess that I just didn’t have the time to recalculate them on a more standardized basis. Nonetheless, this data still suggests to me that if we look at our investment performance less frequently, we are likely to observe positive returns more often. Doesn’t that sound like an idea worth considering?