At 7:55 AM on December 7th, 1941, 353 Japanese planes descended upon Pearl Harbor. Widely considered to be one of the more significant and pivotal moments of World War 2, it signaled the official entry of the United States into the hostilities.
The market was up nearly 3% the month of December 1941. The remaining years of the war (1942-1945) yielded the following annual returns, 12.4%, 19.5%, 13.8%, and 30.7%.
“The stock market is a device for transferring money from the impatient to the patient.”
Warren Buffett
People love to say that knowledge is power. However, the truth is that knowledge is only potential power. It is useless if you don’t act on it. Uncertainty makes many people fearful – and this prevents them from achieving their greatest potential by investing in financial markets and becoming long term owners of this economy; not just consumers. History tells us that corrections occur with surprising regularity but never last. The best investors prepare the dramatic ups and downs and turn it to their advantage. Once you understand these patterns, you can act without fear.
Earlier this week, SEI Private Trust Company published a Commentary entitled, “The S&P 500 Correction: The Medicine Nobody Wants to Take” which we thought would be of interest.
2021 was one of the best years in the history of the stock market. While the S&P 500’s nearly 30% return is not the highest, last year was marked by historically low volatility. The worst down day in the market last year was a loss of just 2.6%. There were also more all-time highs in 2021 than the combined 20 years of the 1970s and 2000s[i]. 2021 is about as good as it gets.
Trading stocks is so easy today. You can download Robinhood® in about 30 seconds. In less than five minutes you can link a bank account and start trading meme stocks or crypto. Very different than my first stock purchase. I’m not that old, but sometimes it feels that way.
I bought my first two stocks at the same time in 2010. Netflix and Evcarco Inc. I’m sure you’ve heard of at least one of these. It probably took me two hours to figure out how to open a brokerage account and fund it. The only reason I spent that much time on it was because I had just decided to change my college major from History to Finance. Buying my first stocks felt like something a Finance major would do. Netflix’s stock price closed around $25 a share that year. Evcarco’s stock price was under $0.01. You probably can see where this story ends.