- Pivot & Flow
- Posts
- Silver Linings In An Abysmal Market
In partnership with
Happy Sunday
This was gonna be a tariff post but you know what? Screw that, I've heard enough about tariffs and you probably have as well.
This is basically going to be a visual exploration of the mantra "everything is going to be ok" so if you're not into that perspective, feel free to skip this week! 😊
Lets dig in…
Please consider checking out today’s sponsor
The first search engine for sales leads - 100 free credits to start finding quality leads.
The Historical Perspective
I hear the chatter. It’s scary. It’s a “once in a lifetime event” and “never been done before.”
The market has been through a lot and will continue to go through a lot, but has always come back. I like to remember these simple principles:
I’m not smarter than the market, so I buy the market.
Avoid the noise and keep buying when value presents itself.
Long-term if I’m in a low-cost, in a well diversified portfolio, none of this should matter to me from an investing standpoint.
From a trading viewpoint, this volatility is lovely.
Click to enlarge
The fact that market value increases over a long timeline obscures the boatload of misery and suffering on that chart above. This take isn’t much comfort for people who lived through literal decades of tangible stagnation and decline. My friend Mark always likes to put this in our convos as a reality check.
That’s fine, I get it… right now however, I don’t think that outlook makes much sense. We are in a tech revolution, truly. Software is optimizing EVERYTHING, we are currently becoming extremely efficient at literally everything. Manufacturing, managing our health, and yes… even macroeconomic trade strategy. The world is optimizing, and that gives me glimmering hope we will not get stuck in a decade-long chop slop from all these tariffs.
Asset Performance Context
This view shows how various asset classes have performed over the past decade. While there’s significant variation year to year, the long-term trends remain positive for most investment vehicles.
Click to enlarge
Navigating Market Draw-downs
The S&P 500 has returned an average of 10% per year since 1928 despite an average intra-year drawdown of -16%. We’re at -17% right now. There’s no upside without occasional downside, no reward without risk.
Click to enlarge
Recent Market Events in Context
What normally happens after massive 2-day meltdowns like we saw last week?
The S&P 500 fell 10.5% over the last 2 trading days which was the 5th biggest 2-day decline since 1950. What has happened in the past following the biggest 2-day declines? Stocks were substantially higher over the next 1, 3, 5 years every time.
Click to enlarge
Volatility Signals
The $VIX ( ▼ 2.49% ) ended the week at 45.3, among the highest weekly closes in history. What has happened in the past following the highest levels? Stocks rallied 100% of the time over the next 1, 2, 3, 4, 5 years with returns far above historical averages. To me, this means a lot less than the above data… this one’s really just for context.
Click to enlarge
Stay curious, and stay safe out there.
- John
Today’s Sponsors
The first search engine for leads
Leadsforge is the very first search engine for leads. With a chat-like, easy interface, getting new leads is as easy as texting a friend! Just describe your ideal customer in the chat - industry, role, location, or other specific criteria - and our AI-powered search engine will instantly find and verify the best leads for you. No more guesswork, just results. Your lead lists will be ready in minutes!
Note: This newsletter is intended for informational purposes only.