Not Weird At All
We're going to swing the pendulum back to the money side today, which was spurred by a series of conversations I had with friends over the past few days. Specifically, they asked me about the U.S. stock market. One friend pointed out that if the year ended today, the market would be up about 13% for the year. Their understanding is that the stock market is supposed to give us an 8%-10% annual return. Further, based on their recent memories, they can't recall in recent history when the market actually finished a year in the 8%-10% range.
"Isn't that weird?" he asked. He was right about the recent past. Here's what the total U.S. stock market has looked like over the past 10 years:
This decade-long span has provided annual returns ranging from -18% to +31%, with no single year falling in the 8%-10% range. It's safe to say that the stock market seems erratic.
This isn't a last-decade phenomenon. Over the past 156 years, only three single years have landed in the 8%-10% range: 1912, 1916, and 1993. The other 153 years fell outside of this range, often ridiculously so. However, when we step back and factor all the wild years into one cohesive data set, the U.S. stock market has averaged 9.25% over those 156 years.
In other words, getting less than 8%-10% in a single year isn't a bad thing. Losing money in a single year isn't a bad thing. Feeling pain in a single year isn't a bad thing. Rather, it's the admission price to earning that long-term 8%-10% we're striving for. We must take the terrible with the great if we want the good. That's the secret to investing.
How does this relate to meaning? In my coaching and teaching, I see far too many people sweating and stressing over this investing stuff, so much so that it hinders their ability to live joyful and meaningful lives. My challenge for people today is to simply let the market be the market (goods, bads, and everything in between) and pursue a meaningful life. Be patient, quit looking at your investment accounts, and don't let the news bum you out. In the short run, it might feel scary, but in the long run, we will prevail.
Have an awesome day!
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