These things happen

The newsfeed at noon on Wednesday, September 14th, 2022, read, “Stocks rise slightly as Wall Street tries to recover after worst day since June 2020.” I love the headline news cycle because it is so consumable and easy to grasp at first glance. But I like to have context. That is why I try to look deeper than any given headline.

On top of all the issues and feelings that news cycles bring us, we get the reminder that a day like September 13th has not happened in a while. Or, in this case, about 27 months.

The reality is these days happen. And we know that. They happen less frequently than our minds tell us they do. The good days measured by upward moving markets generally occur more often than we tell ourselves. Headlines and our feelings are typically predisposed to the worst-case scenarios.

This chart helps us put the bumps up and down in the markets into perspective.

A few things stand out about the last three years in the stock market.

• 2020 had some actual volatility to measure. Remember the onset of COVID? We can easily see even if we do not remember the days with +9% gains and -12% losses. Many of those outlying days were found in March and April. Accounting for this volatility, 2020 still produced a +15.6% return in the S&P 500.

• 2021 was a docile year by all accounts. Very few days moved the needle at all. A handful of -2% days and one or two days just above +2%. After yesterday 2021 looks appealing. Especially considering the +26.2% that the S&P 500 turned in for that year.

• 2022 has a little over three and one-half months of performance remaining, so it is anyone’s guess (and just a guess it would be) to give a complete picture for the year. Days of +2% performances are outweighed by days of -2%.

So this chart, at a minimum, allows us to visualize the volatility and consider how it impacts our situations. A prudently managed financial plan accounts for days like yesterday. It also accounts for the best and the worst of the markets. The long-term portfolio allocations should be established to help maximize the probability of reaching our financial goals while minimizing the amount of risk taken to achieve them.

There will always be another headline. We are here to help ensure you feel confident in your financial life despite future news and market volatility.