Why the Stock Market’s Summer Doldrums Are Not a Problem

That’s why, as a second-best different, I hope for one thing extra modest: a uneven market that experiences periodic downturns, however one which developments upward for very lengthy durations.

The Stock Market’s Movements

That is, in truth, a tough description of what the inventory market has been like for the previous 25 years, based on statistics offered by Howard Silverblatt, senior index analyst for S&P Dow Jones Indices. In that interval, the S&P 500 has returned 552.31 p.c, or 7.8 p.c, annualized, however to garner these good-looking returns, an investor would have needed to sit tight by way of numerous downturns.

While August has up to now been a destructive month for the inventory market, there have been no main downturns this yr. Through July, the S&P 500 rose for 5 consecutive months. Just seven large tech shares — Apple, Nvidia, Microsoft, Amazon, Meta (Facebook), Tesla and Alphabet (Google) — accounted for greater than two-thirds of the S&P 500’s positive factors.

This yr, by way of July, the S&P 500 rose 19.5 p.c, for a complete return, together with dividends, of 20.7 p.c. Those had been splendid numbers, however the market had been rising so quickly on such a slender base that it appeared to me that it was setting itself up for a fall.

What’s extra, from a market backside on Oct. 11, 2022, by way of July, the S&P 500 gained 27.9 p.c, for a complete return of 29.6 p.c together with dividends. In June, when the market had gained 20 p.c from its October low, many commentators declared that the bear market that began on Jan. 3, 2022, was over, and {that a} new bull market had begun.