On relevancy and irrelevancy
Can you find ANY historic precedent where, during a recession, highly valued growth stocks HAVEN’T declined substantially more than the broad market?
How is that relevant to anything if the investor in high growth stocks ends up making lots more money? To give a good example, from Jan 1, 2000 to Dec 31, 2008, factoring in both the Internet Bubble Bursting and the 2008 Crash, the worst in 80 years… my portfolio was still up 217%. That is more than triple, of what it was before the two crashes. Now read that again!
During those eight years the S&P dropped from 1469 to 903, a drop of 38.5%!!! Same time frame! A loss of 38.5% compared to a gain of 217%!!! So how is that quote above relevant in any way???
This is just a longer term example of my portfolio having gains of 45% last fall, while the market was bottoming at a loss of 13% for the year. And it wasn’t just me. I know of no one who had been on the board all year who wasn’t positive year-to-date when the “market” was bottoming at down 13% for the year. And plenty of the people on the board were up as much as me (45%) or more.
That is how one makes money in the stock market, investing intelligently in high quality growth companies. And don’t try to time the market. And don’t live in constant fear of the next big recession. If you invest well, you’ll be so far ahead in the long run, either before or after the recession, or both, depending on when you start, that the next recession simply won’t matter.
There are some people who haven’t invested since 2008 because they’ve been so afraid of the next big recession. My portfolio investing growth has been a gain of 15.6 TIMES since the end of 2008, while they have warned constantly about the next big recession, which they could see coming each and every year. Sure it will come, and if I lose 30% of my portfolio value, I’ll still be at 11 times what I started with. If the S&P loses just 20% they will be at 2 and a half times what they started with. Which would you prefer?
PS - I should clarify again, that my investing being up 15 times doesn’t mean I have 15 times more money. I’ve been living almost 23 years (since I retired early) on my stock market gains, sending my daughter to college and grad school, buying food, clothing, theatre and movie tickets, furniture, houses, an apartment, automobiles, maintenance, medical expenses that aren’t covered, insurances, paying taxes, donating money, eating out, everything. I have no other source of revenue except Social Security. No pension, no other revenue. Haven’t needed it.