Family Update
My kids told me Netflix is actually starting to dumb down their scripts on purpose, because so many people are watching with their phone in hand instead of paying attention. There's a term for it: "second screening."
My oldest, Chris, has turned into a grill master almost overnight. I showed him the basics once, and now he's producing perfectly cooked steaks on command, no supervision required. He'll drive himself to Publix, hand-pick the meat, fire up the grill, and if we're not paying attention, he'll eat the whole thing. It's a great skill to pick up, especially in a house full of hungry people who don't really like to cook.
My four kids went to the mall together, just the four of them, no parents in tow, and as far as I can remember, that's the first time that's ever happened. They hit the shops for shoes and shirts, then stopped to eat grilled cheese sandwiches, a vanilla latte, and Auntie Anne's pretzels. They all got along great, which is a blessing beyond measure.
I have to admit, as I was researching this newsletter, even I was shocked by some of the data.
1.Most years, stocks go up. If you look at the stock market's history, it's ended the year higher about 3 out of every 4 times.
2.Big dips during the year are totally normal. Even in years that turn out to be good, the market typically drops about 14% at some point along the way. Despite that scary dip, it still finishes the year positive about 80% of the time.
3.Most crashes recover faster than you'd guess. Looking at major market drops throughout history, in 7 out of 11 cases, the market climbed all the way back to a new high within about a year.
4.2008 looked way worse than it actually was if you stuck it out. The market fell almost 57% between late 2007 and early 2009, the worst crash since the Great Depression. But if you kept your money invested and let your dividends get reinvested instead of cashing out, from the bottom, if you stuck with it, you got all your money back in THREE years. Why is this not front-page news in every financial periodical?
5.Nobody has ever lost money over any 20-year stretch. No matter when you started. Investing, even right before a crash like 2008, if you held on for 20 years, you ended up positive. The worst 20-year stretch still averaged about 6% a year, and the best averaged over 17%.
6.Trying to dodge the bad days can wreck your returns. If you pulled your money out and happened to miss just the 10 best days the market had over a 20-year period, your total return would have been cut roughly in half. Think about that. Over a 5000-day period where the markets were open, if you miss the best 10 days, you would lose half the return.
7.The market dips by 10% or more almost every year, and it doesn't last long. This kind of dip is called a "correction."
8.Over the long run, stocks have averaged close to 10% a year. Going all the way back to 1928, that's the average yearly return.
9.When the market drops, it drops less than it gains when it's going up. On average, a bear market loses about 35%, but a bull market gains about 112%. The ups are bigger than the downs.
10.The market hitting a new all-time high is not a red flag. Since 1950, the market has set a new record high about 17 times a year on average. And weirdly, the year after a new high tends to do slightly better (13.4% average) than a random 12-month period (11.9% average).
11.Most people don't actually earn what the market earns because of bad timing. In 2024, the market itself returned 25.02%, but the average investor only made 16.54%. That's an 8.48 percentage point gap, and it's not because they picked bad investments; it's because they bought and sold at the wrong times.
12.This timing problem isn't a one-year fluke; it's been going on for decades. Over a full 20-year period (1998 to 2017), the average everyday investor earned only about 2.6% per year, which is barely better than inflation. Meanwhile, someone who stayed disciplined would have done much better.
Be Blessed,
Dave