It has been 45 years since BusinessWeek declared the \u201cDeath of Equities,\u201d warning that rampant inflation was \u201cdestroying the stock market\u201d and \u201cto regard the death of equities as a near-permanent condition.\u201d1 These dramatic prognostications haven\u2019t subsided over time, likely because negative news is more appealing. When one news website decided to report exclusively good news for a day, it lost two-thirds of its readership.2 Our brains are hardwired to react more strongly to negative information.<\/p>\n
As we begin a new year \u2014 and in this season of resolutions \u2014 why not focus less attention on the headlines? One reason is that negative news can skew our perceptions. An article in The Economist suggests that in recent years, opinions about the state of the economy have diverged from reality (see page 3). This has been termed a \u201cvibecession,\u201d where the prevailing mood is significantly more negative than the actual economic situation.<\/p>\n
This may not come as a great surprise \u2014 our brains aren\u2019t meant to handle the high volume of negative news we are fed today. Just two generations ago, most of our news was delivered by local television or newspaper. In the last 20 years, the internet made global news more ubiquitous. With the unveiling of the iPhone in 2007, news is now available at our fingertips 24\/7; and in the last decade, social media has continued its proliferation.<\/p>\n
From an investing perspective, negative news may create undue concern and sometimes compel investors to make hasty decisions. We all know the oft-counterproductive behaviours, such as trying to sell before a market downturn or, worse still, abandoning stocks during a downturn, which deprives the investor of the ability to eventually recover. While these appear to be intuitive actions in the face of uncertainty, they can derail the investing journey.<\/p>\n
Today, there has been no shortage of negative news. Many are understandably struggling with an increasing cost of living and the impact of higher interest rates. Global economies remain highly indebted, economic conditions at home are softening and we\u2019re still likely to see the lagging effects of the rate hikes. As advisors, we are focused on managing portfolios to navigate the challenges that come with the changing times.<\/p>\n
However, it\u2019s worth repeating: we\u2019ve experienced these challenges, and many others, before. Recessions, financial crises, inflation, stagflation, even global conflict and war \u2014 the returns since the \u201cDeath of Equities\u201d include all of these terrible things. And, yet, we\u2019ve persevered and forged ahead. Consider that an investment of $100,000 in the S&P 500 Index during that period of maximum pessimism 45 years ago would have yielded around $8 million today. Decades later, in 2019, the publishers would sheepishly admit: \u201cThe S&P 500 return since its 1982 low has been 7,000 percent. Not bad for a corpse.\u201d5 Yet, participating in this growth required having confidence that brighter days lay ahead.<\/p>\n
As we begin another year, look forward to those brighter days ahead. We would like to take this opportunity to express our gratitude for entrusting us with your wealth management. Wishing you and your loved ones an abundance of health, happiness and prosperity in 2024.<\/p>\n","protected":false},"excerpt":{"rendered":"
It has been 45 years since BusinessWeek declared the \u201cDeath of Equities,\u201d warning that rampant inflation was \u201cdestroying the stock market\u201d and \u201cto regard the death of equities as a near-permanent condition.\u201d1 These dramatic prognostications haven\u2019t subsided over time, likely because negative news is more appealing. When one news website decided to report exclusively good […]<\/p>\n","protected":false},"author":68,"featured_media":1336,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_oasis_is_in_workflow":0,"_oasis_original":0,"_oasis_task_priority":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[27],"tags":[],"class_list":["post-826","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles"],"_links":{"self":[{"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/posts\/826","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/users\/68"}],"replies":[{"embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/comments?post=826"}],"version-history":[{"count":2,"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/posts\/826\/revisions"}],"predecessor-version":[{"id":952,"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/posts\/826\/revisions\/952"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/media\/1336"}],"wp:attachment":[{"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/media?parent=826"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/categories?post=826"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/smokinbulls\/wp-json\/wp\/v2\/tags?post=826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}