The Impending Selloff

Over the past year predictions of a selloff have been a dime a dozen. This is nothing special.

Over the past decade, during one of the strongest bull markets in history, we have had numerous predictions of a bubble.

For example, in 2011, as we climbed back from the financial crisis the market was likened to the tech bubble of 2000 . In 2013, a Nobel Prize winner warned of a stock market bubble. That same Nobel Prize winner again warned of a market bubble in 2015. And in 2018, it was almost a foregone conclusion that bubble would burst.

All during that time the market increased significantly. There were several selloffs along the way, but routine selloffs are a normal function of capital markets. Despite the several selloffs, the S&P 500 is up over 350% since 2009.

No matter how bad we wish experts could predict bad markets, the evidence is overwhelming that they can’t. We know selloffs will happen. The real question is how will you choose to respond.

The best course of action for investors is to ignore the fear mongering and ensure investment decisions are guided by their personal investment plan.

– Jonathan

 

©2021 The Behavioral Finance Network. Used with permission.
CRN202512-3187340
 

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. All indices are unmanaged and may not be invested into directly.
 
Sources:
Business Insider, May 3, 2011, “Why this Stock Market Looks Like Tech Bubble 2000 All Over Again”
CNBC, December 2, 2013. “Nobel Prize Winner Warns of US Stock Market Bubble”
Financial Times, September 13, 2015. “Fears Grow Over US Stock Market Bubble”
Forbes, September 5, 2018. “Disaster is Inevitable When America’s Stock Market Bubble Bursts”
Performance based on S&P 500 Index from March 2009– August 2021. Includes dividends reinvested.