By Michael Batnick, CFA
The Irrelevant Investor, LLC
If you told me in March that in less than 100 trading days, the S&P 500® Index would be back near all-time highs, I would not have believed you. 2020 is teaching investors a lesson that should be apparent to all of us who watch the market closely: it is full of surprises. The best way to plan for surprises is to be ready for a wide range of outcomes. For example, when thinking about what stocks are going to do over the next 10 years, there are four destinations, with an unlimited set of paths.
- Maybe we get lower returns, as many—myself included—are expecting.
- Maybe we get historical average returns.
- Maybe we get the worst returns we’ve ever seen.
- Or maybe the next decade looks like the last and we continue to see above-average returns.
We should be prepared for surprises, but we shouldn’t let them guide us.