“Markets In Turmoil”: A Positive Indicator?

This year reminds investors the stock market doesn’t always go up.  Just this week we’ve witnessed wild swings from positive gains to negative losses.  The reasons to remain pessimistic feel endless:  Rising interest rates, inflation, the ongoing war in Ukraine, and the overall strength of a global economy crawling out of a pandemic.  These factors and others contribute to the negative sentiment. 

On occasion, CNBC runs an evening program special report called Markets In Turmoil.  It typically airs during a period in which markets are being tested.  As you could probably guess by the title, their “financial experts” outlook isn’t exactly uplifting during these episodes.  A growling bear with red eyes says it all...

Watching Markets In Turmoil, it's easy to forget about the long track record of human ingenuity, innovation, and evolving technology that push the market forward through difficult times.  We have no shortage of historical data points, charts, or optimism to remind us that investors who stay patient will be rewarded.  We’ve written extensively in the past on all these topics.  Data aside, we came across a graphic today that’s too good not to pass along.  The graphic below tracks S&P 500 performance for the 1-year period following a Markets In Turmoil air date.

The average return of the S&P 500 after an airing of Markets In Turmoil is 40%.  We in the industry jokingly refer to Markets In Turmoil as a contrarian indicator. 

We’re certainly not making light of watching account values fall.  However, it serves as a subtle reminder to not get too wrapped up in pessimism or “expert” opinion.  If the S&P 500 has been positive 100% of the time during the 1-year following a Markets In Turmoil air date, we like our odds. 

More importantly, let's remember to find time to celebrate our mothers this weekend.  Investors could learn a lot from their strength, conviction, and ongoing desire to persevere. 

Stay positive, keep investing, and have a wonderful Mothers Day,

Buttonwood Wealth

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