Stock market drops and returns – Whiteboard Wealth #4

No one ever said investing would be easy! It’s not, and the first couple of weeks this year have proven it yet again. I thought I’d make this quick video with attached PDF to illustrate just what’s normal for the markets, and what’s not.

The PDF shows the stock market intra-year returns. It really puts things into perspective because on average each year the S&P 500 index will drop about 14%. That drop happens at some point, whether the market starts up and then drops or (as in the case of this year 2016) drops substantially right off the bat and then recovers.


Check out the “Investing Isn’t Easy” video here:

Intra Year Declines & Market Returns – S&P 500 from Greg Phelps on Vimeo.

Stock market intra-year returns from 1981 to 2016:


Investing isn't easy, get used to it!

The stock market drops each year about 14%. Get used to it! Investing isn’t easy.

The S&P 500 is 500 of the US markets biggest companies. They’ve enjoyed wonderful average annual returns, but not without volatility. In fact, statistically the S&P 500 rises about 75% of the years going back to 1926.

Just what will this year bring us? No one knows! If anyone actually knew they’d certainly be ahead of the game, but they’re just guessing. For every news actor who thinks the market will crash because of X, Y, or Z, there are three more who think it’s the best time to be a buyer ever!


The 2016 index return is no different

When it’s all said and done, you have to tolerate the bad markets to enjoy the good ones. The first two weeks of 2016 are no different. The markets have gotten off to a very rough start, suffering noticeable declines. Personally, I don’t find this to be anything out of the ordinary, and definitely no reason to panic!