We are close to the first anniversary of the greatest drop in stock market history, namely, the drop of March 2020. That drop was followed by one of the fastest rebounds in market history. What can we learn from that and the market movements which followed?
Here is what we know for certain.
- Buying the US economy as a whole has been the best investment for over 200 years, with wide ups and downs. It will likely remain the best investment into the foreseeable future, with wide ups and downs.
- In less than one hour, we can teach a high school student how to equal the market, that is, the US economy.
- Outperforming the market over the long run (a decade or more) is nearly impossible.
- SPIVA convincingly shows that over the course of a market cycle (peak to trough to peak), about 5% of investors outperform the simple act of buying and holding an exchange-traded fund which tracks the S&P 500.
- Investors on average cannot beat investors on average.