This market continues to march ever upward. I’m up 28% YTD with a relatively conservative portfolio consisting of 70% aggressive growth (Saul like) stocks and 30% high dividend paying stocks. Some of you are up much more.
I’d like to pose a simple question to this board: In 5 years, will this market be higher or lower than it is today?
My gut tells me that we will have corrections along the way, but that patient investors will be rewarded for staying 100% invested in stocks… barring a nuclear war.
• Personally I won’t count on 5-year returns to be compounded anywhere near 2017 YTD returns. I hope I’m wrong there but hope isn’t usually a very good strategy for investing.
• 5-year periods aren’t very long to use as a ruler, and anything can happen.
• Replies could be age-dependent. Being born in the middle of the Boomers, it’s hard for me not to see the next 5 years as being critical.
• Even with the Boomers retiring, there aren’t many alternative places for them to invest a lifetime of savings.
• Several other countries are going through similar demographic trends. They have few better alternatives to US equities either. (Look at Japan, ouch, and they don’t encourage/allow immigration.)
• There have been only a wee handful number of corrections lasting more than 5 years historically.
• I don’t put a lot of faith in my crystal ball. You probably shouldn’t either.
. . . patient investors will be rewarded for staying 100% invested in stocks . . .
If the sharp, 5 year cutoff could be a little more flexible, even 12 months’ worth of flexibility, say, I think the odds of your projection being right are pretty good and improve with added flexibility of an end date.
I recently attended a presentation given by the Minnesota State Demographer regarding the aging of America. As a PhD with over 40 years of experience, one of his most profound statements was that on average, most people age at a rate of approximately 365 days each year.
Sorry. That was honestly one of his opening remarks.
I recently attended a presentation given by the Minnesota State Demographer regarding the aging of America. As a PhD with over 40 years of experience, one of his most profound statements was that on average, most people age at a rate of approximately 365 days each year.
And this just proves how wrong the experts can be. He forgot to take into account 2020.
Going back to the OP’s question, I say you hope for the best, plan for not so. I’m going with the bucket plan using 3 portfolios. 1st bucket is my short term portfolio in mostly cash or equivalent for living expenses for 1-3 years. 2nd bucket is conservative, has some dividend stocks, bonds and ETF’s, and should get me through 5+ years even with a big correction. 3rd bucket is more aggressive with 40% in growth (Saul) stocks, 40% index ETF’s. Since I’m retired with no income and holding off taking SS, sleeping well at night is more important than a higher growth rate.
This current bull market has me sleeping pretty good, even with my conservative style.
In 5 years, will this market be higher or lower than it is today?
nobody can answer that with any accuracy.
It might be lower in 5 years and higher in 6 years. Or vice versa.
My gut is persistently wrong about predicting market corrections. My figures are better at identifying them once they are well underway. by then the best sell time has come and gone and a good buy time is not too far off. It is a sure bet that a decline , even a nasty Bear, will come. When is a wild guess.
I could do better predicting a recession since the stock market has correctly predicted 9 of the last 7 recessions.(just example numbers)