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Do you ever go through something that you know is not going to be pleasant but ultimately is for your own good? I feel that way every time I visit the dentist. I hate going, yet I know the outcome is to my long-term benefit. For the first 14 trading days of 2022 we’ve finally seen the stock market do something it hasn’t done in nearly 2 years (think back to March of 2020) which has been, present us with downside volatility and negative returns. As of Friday’s close, the S&P 500 was down 7.66%, the Russell 1000 Growth (growth) was down 12.25% and the Russell 2000, which tracks small and mid cap stocks (aggressive growth) was down 11.44%. Yet I, like you, am heavily invested in the market, was able to sit through my children’s basketball games this weekend with a smile on my face. Why? The stock market’s corrections are a feature, not a flaw.

The only reason we see positive returns long term is because we can have negative returns short term. The stock market is giving you and I a chance to purchase ownership in publicly traded companies and those companies are being priced every minute and second the market is open. Inevitably news cycles, economic data, Federal Reserve policies or implied policies and much, much more will create pricing movement, that one needs to be ready for. I typically analogize it to your home. Technically your home value is fluctuating each and every day. Why? Because your neighbor sold his home for a steal because they needed to move quickly or the home a mile away, very comparable to yours sold to a friend, at a steep discount. This creates downward pressure on your home value’s, which hasn’t changed your life nor your long-term opinion of the home, once more normal sales come through, that would move your home back to a respectable value. The major difference is the fact that your home value doesn’t come on a monthly statement and your mutual funds and ETF’s (that hold the stocks of all the companies you invest in) are sent by Schwab each month and to the extent you are daring enough, you can watch them daily on

Stock market volatility is normal. What we have experienced since March of 2020 has not been normal. As a matter of fact, to understand how normal volatility is, let’s look at the chart in figure 1.1. According to the Prudential Asset Allocation Chart, which your advisor would be happy to provide you, the stock market has been positive 80% of the time, over the last thirty years. This means, roughly 8 out of every 10 years, the market is generating a positive return. However, what we see above, helps us to understand that 95% of time, within any given year we have seen a nearly 5% decline. Nearly 63% (almost 2/3) of the time that market drops at least 10% and almost a quarter of time (26%) we enter a bear market (which is defined as a drop in the market of at least 20%). Stock market drops are very normal and expected, intra-year.

According to Ben Carlson, of the Blog, A Wealth of Common Sense, “since 1950, the S&P 500 has had an average draw down of 13.6% over the course of a calendar year. Over this 72-year period, based on my calculations there have been 36 double digit corrections, 10 bear markets and 6 crashes. This means on average; the S&P 500 has experienced:

  • a correction every 2 years (10%+)

  • a bear market once every 7 years (20%+)

  • a crash once every 12 years (30%+)

These things don’t occur on a set schedule but you get the idea.”

Moving Forward – What Should You Do?

Perhaps the number one killer of investment return is emotion. It’s often said that fear and greed control the market, in the short run, but with the help of a dedicated Smartvestor Pro, they will help you to not focus on emotion but rather long term goals and the strategy, consistent to help you achieve those long term goals. Dave Ramsey often says, the only people that get hurt on a roller coaster are those that jump off in the middle of the ride. On the Building Wealth Live Event, on January 13 2022, Dave Ramsey, Rachel Cruze and George Kamel articulated you need an advisor to help guide you through this journey called building wealth. Vanguard, who many think of as the anti financial advisor, actually put together research in 2019 that said a good advisor’s Alpha, meaning the return value they provide you, partly through controlling your behaviors and emotions, can add as much as 3% to your returns. You can be your own worst enemy in investing, thus having a partner to control that emotion, can be to your benefit.

We believe in asset allocation, as Dave Ramsey does. This means spreading your money out. Money is like manure, left in one spot, it stinks but spread around helps things grow. Take a look, in figure 1.2, at how asset allocation helped you this year.

As mentioned earlier, this year growth (as tracked by the Russell 1000 Growth) and aggressive growth (as tracked by the Russell 2000) are both down pretty good, 12.25% and 11.44%, respectively. However, your growth & income (as tracked by the Russell 1000 Value) is only down 3.64% and international stocks (as tracked by the MSCI EAFE) are only down 3.15%. Additionally, if you’re a retiree or pretty close, you probably have a fixed income allocation, which may consist of the Vanguard Total Bond Market Index which is down 1.69% and the PIMCO Income Fund, which is only down a mere 0.87%. The point here is diversification has helped to soften what could have been a much deeper blow to your portfolio’s losses, than if you had been to concentrated in any one asset class.

Your decision is easy going forward. Stick to your plan. Know that nearly 95% of the time, we see these corrections happen and it could get worse or it could all change tomorrow morning when the market opens. Whatever happens your financial advisor team at Whitaker-Myers Wealth Managers is here to help you continue your path through Baby Steps 4, 5, 6 and 7 to ensure you get to live and give, like no one else!


January 24, 2022

John-Mark Young

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