Back to Square One

Well, the S&P 500, the benchmark that so many folks use to determine how well the stock market is doing, has gotten back to “even” for the year. Its taken five long months to dig out of the Mar 16th hole of $2,304.92 (a 32% drop from its Feb 10th high). If things continue along these lines, we could expect a 4% – 5% return for the year. So everyone is OK, right?

Actually, the situation is not so rosy. Yes the S&P is back, but in listening to Ric Edelman the other day, he noted that the five big tech stocks (Facebook, Apple, Amazon, Netflix, Google) were up 30% – 35%, but the other 495 stocks of the S&P were still down an average of -5%! So the market rally isn’t broad based, its concentrated in the tech stocks – and those of us around in 2000 – 2002 remember how quickly that can evaporate.

For us, we are still down a little for the year (-0.8%) primarily due t the fact that we are invested in International, Small-Cap and REITS (REITs are getting hammered with the Chinese Covid virus). Still, by diversifying, I think our recovery is a little more broad than just the folks that are in the S&P 500.

It will be an interesting time for the remainder of the year. We are starting to creep out from the lockdowns, but a significant amount of economic damage has been done, especially to small businesses, the restaurant industry, and the commercial real estate industry. I believe we’ll see  a waive of bankruptcies for the next 5 years as all of this is cleared out, and the economy won’t really start humming until these are cleared away.

Of course politics will also have a effect over the next 4 years. Going to be interesting….

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Mr. 39 Months

2 thoughts on “Back to Square One”

  1. We are at an all time high this week. Partly because I dumped some of my cash bucket into stocks in March and April and let it ride back up. But who knows what is next. I’ll just sit and watch, we don’t actually withdraw any of the dividends, interest or growth of our portfolio because my one day a week hobby job of consulting (not blogging) pays our bills. If we were withdrawing I’d be more concerned about sequence of risk but as long as I’m at a zero withdrawal rate I’m not very worried about anything.

    1. Congrats on your situation! I’d like to get something like that for the 10+ years from my FI date to when I plan on drawing my social security. Need to stay active and keep the brain going.

      Like your blog, by the way.

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