The S&P 500 index hit all time highs yesterday, and we’re officially in the longest bull market in history. This should be great news for those of us with skin in the equities game, but it seems everybody is busy steeling themselves for the eventual correction to come. This bull run indeed won’t last forever but suffice it to say none of us can predict when the downturn will occur. Chances are equally good that if you take money out of stocks now, you’ll forgo any gains that may still come.
Of course, everyone wants the gains and can't bear to lose a penny. Perhaps I was taught differently: the money I’ve got in the stock market is money that if it completely disappears tomorrow, I’d be completely okay. Capital I’d otherwise fret losing is secured in my savings account, insured by the government. When the bear market does arrive I will not be selling any of my funds: my investment horizon is measured in decades, not years. The market will eventually climb back up just like it did from the 'Great Recession'.
I’m relatively young so obviously I can risk the cyclical whims of the equities market, unlike the soon-to-be retiree counting on his nest-egg to live out the rest of his life (like my parents). But that person shouldn’t have any money in the stock market anyways, given the supremely low risk tolerance at his stage in life. The impending correction shouldn’t affect him at all.
There’s some rumblings regarding the yield-curve and how an inversion of it is a solid indicator of a looming recession. It’s mainly food for investors trying to time the market, but for regular folks like me, I think it’s largely noise. Even if the yield-curve were to invert, the bull market can still go on for many more months before correction happens. Again, none of us can predict the fall.
My investments are quite sound (if I do say so myself) so I’m ready to ride out whatever is to come. Money that I'd absolutely need within the next few years is either in savings or have been moved to it already. Have to say, I’m thoroughly liking the recent increases of the interest rate: after many years of sub 1% returns it's nice to be at least competitive with inflation.