2021 Q4 – Investment Update

Fall is upon us! Neighbors are dusting off their ghouls and goblins and decorating for Halloween. Once Thanksgiving arrives, it seems like the year ends within a blink of an eye and 2022 is here. Not that long ago did our uphill journey begin from the depths of the “COVID Correction” ravine. Now it’s time to catch our breath and peer over the horizon at what’s to come as we begin our descent from this peak. However, just as the summit of one mountain can become the base of another, the investment landscape goes on indefinitely, which makes adhering to a disciplined investment strategy of the utmost importance.

So far, this year has been relatively quiet for the markets. Sure, there have been other headlines across the economic or political landscape, but regarding the markets, quiet is good. Through October 11th, the S&P 500 is +18.23% and the Dow Jones 30 is +15.17%. Value has maintained its slight outperformance vs. growth stocks with the Russell 1000 Value +19.07% vs. the Russell 1000 Growth +15.87%. Energy stocks have led the way and contributed the most to Value’s outperformance. The energy sector is +55.4% year-to-date!

We finally saw the market pause in September with the S&P 500 (-4.79%) and finally bottoming on October 4th. The markets have started strong in October and it wasn’t even enough time to get people who were on the sideline back into the market. The S&P 500 has recovered what it lost in September as of this writing.

To be a good long-term investor, you must have the following 3 things:

  1. Faith – You have to have faith that over time, our economy will grow, expand and continue to move forward. When things get shaken, we know it is temporary which keeps people disciplined.
  2. Patience – When you are looking to be a long-term investor, there is a lot of noise. There will be times when things aren’t working in your favor. If an investor is worried about “the next best thing,” they will always be chasing returns. The “average investor” has not kept pace with inflation over a 90+ year period.
  3. Discipline – People sell at the wrong time because they don’t have faith and patience. They sell at the wrong time because of the lack of discipline and no investment process in place.

People too often will ask, “Is now a good time to invest?” In our opinion, if you are a long-term investor, it is always a good time to invest. Retirees may say, “I’m 65 and retired, I don’t have a long-time horizon.” We would argue that they do, they may have monies they won’t spend for 20 or 25 years. By being a long-term investor, there is always going to be a reason to sell stocks. You will notice just a few events in the graphic1 below that tested people’s discipline.


In the past 20 years, there have been many worth noting including the Tech Bubble bursts, SARS Outbreak, Global Financial Crisis, and most recently the COVID Pandemic. On March 16th, 2020, the market fell 12% IN ONE DAY. If that didn’t scare you as an investor, you have ice in your veins. Since that day though, the S&P 500 is +97%. If you sold, you locked in those losses which makes it that much harder to make a decent long-term return.

What if I had Invested at Exactly the Wrong Time?

From the beginning of 1926 through the end of 2020, the average annual compound return of the Standard & Poor’s 500-Stock Index was slightly greater than 10%. Over this time period, the single worst day to invest in the S&P 500 since the end of the Second World War was Tuesday, October 9, 2007. If you invested on this day, the net effect of all this on the S&P 500 was that in the 17 months (to the day!) October 9, 2007 to March 9, 2009, it declined 57%2. Ouch.

If you maintained faith, patience, and discipline, the average annual compound return since October 9, 2007 was 10% if you just stayed the course. Therefore, if the only investment you ever made in the S&P 500 took place on that single day, it took only about six years (until 2013) for the Index to regain its 2007 peak on that day, and only about eight more years until you achieved the equity market’s quite handsome long-term average return. Being a successful lifetime investor takes patience. No one said it would be easy. A client recently told us, “I hired you because I am too emotional with my money. You guys can make investment decisions in the best interest of your clients without being emotional.” We know it is easier said than done, but a good financial advisor can provide that layer of protection to avoid making emotional decisions with the money you have worked so hard to save. Their job is to educate and revisit your long-term investment and financial plan to show you, “we’ve planned for this.”

If you would like to discuss your long-term financial plan in greater detail, please contact our office to schedule time with one of our Wealth Advisors. If you are not currently a client and value a second opinion, please contact our office at (888) 775-0950. Now is a better time than ever to look at your current investments and financial plan to make sure they are properly positioned for the unexpected.


Jerrod Ferguson

  1. Source: Nick Murray, Ibboston/Morningstar, Yardeni Research, Standard & Poor’s. Average annual compound return October 2007 – August 2021: DQYDJ.com “Historical Return Calculator.” Compound return assumes the reinvestment of all dividends and the payment of all taxes from another source.
  2. Blackrock – “There’s always a reason to sell stocks”, Morningstar as of 6/30/21

Disclosures:  The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks. Investors cannot invest directly in an index. The information provided is for educational and illustrative purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor. All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed.  There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. Vance Wealth, Inc. (“Vance Wealth”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Vance Wealth and its representatives are properly licensed or exempt from licensure.