The Retirement Rise 6.12.2023

Bull or Bear? Does it even matter?

Jun 12, 2023

An Investment Note for Retirees

Isn’t it something that the media is now announcing a new bull market in the wake of all the drama around the debt ceiling?

What does that even mean?

Put simply, the media is calling it a bull market because stocks have increased 20% from their 2022 lows.

Here’s the WSJ with more:

From the WSJ: U.S. stocks rose Thursday, ending the S&P 500’s longest bear market since the 1940s and marking the start of a new bull run.
The broad index powered higher over the past few months, in large part because of a handful of companies posting outsize gains.
Many of those same stocks, including Amazon.com, Tesla and chip maker Nvidia, led the market’s advance Thursday.
That helped propel the S&P 500 up 0.6%, allowing the index to finish up 20% from its October low.

Here’s the secret: none of this matters. Bear markets don’t matter. Bull markets don’t matter. Flat markets don’t matter. Choppy markets don’t matter. Whatever the media is saying essentially doesn’t matter to your investment future.

What matters is that you create a goals-based investment plan and stick with it through thick and thin.

But Morgan! Shouldn’t I watch the markets so I know what to do?

No, not really. Check out this chart from Dimensional:

As you can see, each year since 1926 is a crapshoot. Good luck predicting returns!

Yet, there are two core lessons:

3.7:1 - Stocks have gone up more than they have gone down, to roughly 3.7 up years for every down year. To keep it simple, let’s say three-four up years for every down year.
10% - All those crazy ups and downs have resulted in a remarkably consistent 10% annual return for US stocks.

Fade the bull/bear arguments. Focus on what matters. Your goals. Your financial plan. Your life.