Hey Reader,

To paraphrase Mark Twain, "Reports of my demise have been greatly exaggerated."

It's been a long time since I've sent this newsletter. Too long. For that, I apologize.

Some crazy curveballs have thrown me out of my rhythm. I had to put the newsletter on the backburner while I focused on client work and improving the business as a whole.

I plan to have quality content in your inbox every Wednesday morning, starting with today.

The markets are volatile

You don't need me to tell you that. You can see it on your phone, in your 401(k) account, and every news channel.

The silver lining is that seeing everyone's concern over the markets motivated me to get back on the newsletter to help calm your nerves.

Let's take a look at 5 simple charts to help ease your mind and prevent you from missing out on future returns.

Missing the best days of 2023

Do you remember at the start of 2023 when the US economy and stock market's demise were also greatly exaggerated?

Many people jumped at the chance to exit the market and lock in risk-free CD rates of ~5%. They missed out on double-digit returns.

There is obviously far more risk in the market, and I wouldn't expect anyone's portfolio to be invested 100% in the S&P 500. However, simply missing 5 of the best trading days in 2023 nearly cut your return in half.

Missing 10 days left you with a 3.71% return that barely outpaced the 3.35% increase in inflation from December 2022 to December 2023.

Missing the best 15 or 20 days was so detrimental that you would have had negative returns.

Let's zoom out over the last 25 years

There are between 250-252 trading days in a year, depending on weekends and holidays. So, there were ~6,250 trading days from June 30, 1999 to June 30, 2024.

Missing 10 of those days would have cut the value of a $100,000 investment from $634,000 to $291,000.

Missing 50 days (less than 1%!!!) would have left you with only $56,000 of your original $100,000.

The best time to make money is when everyone else panics

There's no doubt that COVID was a shock to the system. In times of uncertainty, everyone wants safety. Many people equate cash to safety.

This was the first major crash I'd experienced in my career, and everyone wanted to go to cash. We were able to calm most clients down and keep them invested, or at least not exit the market completely. Those who didn't paid a hefty price.

$100,000 invested June 30, 2014 would have grown to ~$194,000 before markets started declining in late February 2020.

Many sold out of the market on the way down or at the bottom on March 24th.

As of June 30, 2024, sitting on the sidelines for a month while the market recovered in 2020 would have cost you more than $40,000. Sitting in cash since then would have cost you ~$181,000.

There's always a reason to sell

If you stay tuned into the news or market coverage, you already know that there's always a lurking threat or reason why this time is different.

While any number of factors can cause short-term volatility and reason for concern, the important thing is to remember what happens over the long term.

Giving your investments time to recover has been a winning strategy for decades. The key is to avoid selling when a correction or bear market strikes by keeping adequate cash reserves for emergencies and withdrawal needs.

Bulls vs. Bears

It's easy to be a pessimist, but it doesn't pay well.

There have been 11 bear markets (drops of 20% or more from the most recent high) since 1950. There have also been 11 bull markets (increase of 20% or more from the most recent low) over that time.

The difference is that bull markets have lasted longer and recovered multiples of what was lost during each bear market.

Whether it's investing or life, it pays to be an optimist.

Conclusion

That's a lot to take in.

What's important is that you see the value of staying invested even when your friends, emotions, and the media are telling you to run for the hills.

The best way I've found to do that is by optimizing the variables that we can control and sticking to the financial plan that was tailored to achieving our financial goals.

As always, feel free to reply to this email with your questions and feedback.

- Matt Garasic

Disclaimer:

This is for general educational and illustration purposes only. This should not be taken as individual investment, tax, or legal advice.

Consult your legal, tax, and financial team before implementing any financial strategies for your specific circumstances.

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• Want practical advice on how to reach your financial goals
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