What will the stock market do today?
Paul would call me every Monday morning and ask me what the stock market was going to do for the week. He wanted to know if he should make any changes to his account as a result of what might happen. Of course, I had no idea what the stock market was going to during the course of the day or the week. Paul was well read and asked great questions about stocks, the stock market and the economy. He kept me on my toes. The interesting thing about Paul’s weekly call was that he did not own one share of stock – not a single share! Paul’s portfolio consisted entirely of bonds. He owned an assortment of CD’s, U.S. Treasuries and Corporate Bonds. When he would ask me if the stock market going down would hurt his account, I told him the stock market could go to zero and he would be fine. In fact, I informed him that if the stock market was going down, his bonds would perform well.
Investors and most individuals have a daily fascination with the stock market. The stock market is hard to ignore with CNBC and the other television shows covering every tick as if it were a sporting event. If the market is up, people feel good. The opposite feeling occurs when the stock market is down.
How does the stock market compare to some of the titans in the sporting industry? The stock market, going back 89 years to 1926, has had an annual winning percentage of 73% (2015 Ibbotson® SBBI® Classic Yearbook). On annual basis, the stock market has “won” 73% of the time! John Wooden, legendary basketball coach for the UCLA Bruins, had a winning percentage of 80.4%. Bill Belichick, the current head coach of the New England Patriots, has a winning percentage of 71.0%. Scotty Bowman, former head coach of the Detroit Red Wings, won 63.2% of his games. Joe Torre, former manager of the New York Yankees, won 53.8% of his games. I would say the stock market is in pretty good company.
It should be noted that on a rolling 20 year period, of which there have been 70 since 1926, the stock market is undefeated. The stock market has made money 100% of the time over these 20 year rolling periods!
So, don’t worry about what the stock market is doing today. It is a waste of your time and energy.
Paul passed away a number of years ago and I think of him often when someone asks me what the stock market will do today.
Bill Parrott is the President and CEO of Parrott Wealth Management, LLC. www.parrottwealth.com