After a significant draw down in the last week of December, which tested investors' mettle, the market staged a strong rally through the first of May. Subsequently, the world's two largest economies, the United States and China, have entered into a trade war and along with the consumer, the market has been the victim.
In light of this volatility, the trade war, the length of the economic expansion, and the other hundred plus data points the talking heads in the media spew forth (to draw eyeballs to their channel and sell advertising space), many investors ask if it is time to get out of the market.
There are some clouds on the horizon...lumber and metals are often canaries in the coal mine and they have been struggling. But on the flip side, corporate earnings are strong, employment strong, corporate tax rates the most favorable in ages.
So what is the answer? Diversification, an investment plan, and the mettle to stick with it. "The market" is 500 companies. The universe of publicly traded companies globally exceeds 100,000...and the remaining asset classes and sub-asset classes for diversification are in the dozens.
Courtesy of JP Morgan, if we look at the 20-year period January 4, 1999 to December 31, 2018, the market returned 5.62%.
If you missed the 10 best days in a 20 year period....it went to 2.01%...
If you missed the 20 best days... -0.33%
I'm not going to try and guess the market's 10 best days in the next 20 years...stay invested, diversify, have a dynamic investment plan, check your emotions and stick with the plan.
Dave + Drew