Content provided by Grant Engelbart, CFA, CLS Portfolio Manager
October 21, 2015 was a great day. It was the day that Marty McFly and Doc Brown traveled to in Back to the Future Part II! The “prophecy” failed to be completely true – the Cubs still haven’t made it to the World Series despite their run this year. But a number of companies have created hover boards. The concept of time travel, both going back in time to change something or having knowledge about the future is something we as humans seem to be enamored, if not obsessed, with.
Investing is definitely not exempt. The regret of not investing at some point in the past – whether at lows or highs – is common and even academically studied. The ability to predict the future is elusive but desired by nearly all market participants. Fear of the future, a prominent theme throughout the Back to the Future films, is always on the minds of investors.
Regardless, I am going out on a limb to predict the future of the stock market: it will look like the past. Take a look at the chart below; it shows the growth of $1 since 1926, and yearly stock market returns since. The scale is displayed in logarithmic form because the returns are so robust. The market has trudged through the Great Depression, World War II, Cuban Missile Crisis, Tech Bubble, Great Recession – and plenty of other things that have made people shout “Great Scott!” On so many occasions in the past, investors have asked themselves, “Is now the right time to invest?”, and the answer is always a resounding, “Yes!”
So, what will the road to your future look like? “Roads? Where we’re going we don’t need roads.”
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