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The Stock Market Hit Bottom 10 Years Ago Today

Here is an article I found interesting in review of where we have been during the last 10 years.


Reposted from Barron’s

Ten years ago on Wednesday, the S&P 500 traded at its lowest point of the financial crisis. Since then, it’s been off to the races.

In fact, if you had invested $1,000 in the stock market at the time, you would now have more than quadruple that, about $4,050—and that doesn’t include reinvested dividends. Throw those in, and your $1,000 investment would now be worth more than $5,000.

It wasn’t easy, of course. The S&P 500 touched 666.79 during trading on March 6, 2009, down 57.7% from its then-intraday high of 1576.09 on Oct. 11, 2007. Investors were still grappling with the demise of Lehman Brothers and Bear Stearns, and wondering which victim the housing bubble would claim next. While March 6 marked the trading low, the S&P 500 wouldn’t have its closing low for another three days. And well into 2009, many investors were still calling the market’s rally a head fake before the selloff resumed. The bear market never resumed.

There were numerous occasions along the way when those bears appeared like they might be right. There were wild swings in 2010 and 2011, thanks to the European debt crisis; in 2012 because of the downgrade of the U.S. credit rating because of the debt-ceiling debacle; in 2015 due to the Chinese yuan, and in 2016 due to the tumble in oil prices. But in retrospect, every downturn was simply something to ignore—or an opportunity to buy more.

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Even taking a more risk-averse approach with portfolio that was 60% stocks and 40% bonds would have paid off by turning $1,000 into $3,542, a 254% gain, if 60% had been invested in the SPDR S&P 500 ETF (SPY) and 40% in theiShares Core U.S. Aggregate Bond ETF (AGG).

Gains like that are unlikely to repeated. The S&P 500 has averaged a 17.6% annualized return since the close on March 6, 2009, compared to its average of 10.2% from 1950 through March 6, 2009.

Remember, it’s the next 10 years that matter.

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