The Benefit of Hindsight
I received several angry messages from buddies regarding my recent post about why we shouldn't time the stock market. These buddies, of course, are "investing experts." They are mirror images of the man I covered in the previous post. They believe what he believes and acts as he acts. Here's what one of them said (excluding the expletives):
"You can't invest today in good faith. The &%$#@!& market is far too expensive. Every dollar you put in is begging to be lost. Stop giving your readers &@$#% advice!"
I present to you Exhibit A:
This is a graph of the U.S. stock market (S&P 500) since 1/1/2000. As 2000 unfolded (far left side of the graph), due to the tech bubble, the stock market hit unprecedented levels of "too expensive." The market was clearly overvalued, and experts warned that it was too high to justifiably invest.
Do you see where this is going? Yeah, while the market felt a bit rich in 2000, with the benefit of hindsight, it now looks cheap. In fact, today, the stock market is 4.4x higher than it was at the peak of "too expensive" in August 2000.
It's not all roses and sunshine, though. What you'll see if you look close enough at this graph are the following rough patches:
46% loss after all-time high in August 2000
54% loss after all-time high in October 2007 (second-worst crash in history)
32% loss after all-time high in January 2020
25% loss after all-time high in December 2021
20% loss after all-time high in January 2025
And today, after the stock market hit a new all-time high in September 2025, we're back in the same position. Will we get our butts kicked again? Absolutely! However, with the benefit of hindsight, today's all-time high will eventually look cheap.
I say it over and over again, but please don't let the naysayers (or "experts") scare you into fear-based decisions. History always has a way of taking care of itself.....eventually. The benefit of hindsight will soon prove your patience right.
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