Third Quarter 2020 Market Update

By Ryan Gilmer, CFA, CMT Chief Investment Officer

October 10, 2020

“The best time to plant a tree is twenty years ago. The second best time is today.” -Chinese Proverb

In the third quarter, stocks continued to go up, regardless of where you looked. US large cap, small cap, and international stocks all increased. Bonds lagged behind, but still had positive returns.

Something else happened in the third quarter – I turned 36 years old. This had me wondering: how have stocks performed over the course of my lifetime? So, I made this chart showing the growth of $10,000 invested in US and international stocks from September 28th, 1984, through the end of third quarter 2020:

Some observations from this experiment:

  • Overall, returns have been pretty attractive. International stocks were up over 8% per year, resulting in over $160,000. US stocks increased over 11% per year during this timeframe, turning into over $469,000. Most people would probably jump at these returns over the next decade.
  • Investments are a lot like life. When we look back at individual events in our lives, we see happiness and grief, triumph and rejection, excitement and fear, and many other emotions. Hopefully, over the whole time period, we view it all with thankfulness and gratitude. But we also see struggle and difficulty. US stocks lost money from 2000-2009. International stocks have struggled since 2007, especially relative to US stocks. In almost 15 years of working with clients, I’ve noticed how challenging it is to look past the current adversity to the probability of positive returns. There are always reasons for the market to decline. Investing can be emotionally trying and difficult, even though it’s worth it. Just like life.
  • It’s harder to travel alone. Paradoxically, the most troublesome, demanding, and exhausting times in life give us the greatest potential to grow. The same is true of investing. When markets are going down significantly, it’s hard to stay in and watch your account balances go down. After the market bottoms, usually increasing quickly, it’s easy to emotionally anchor to the exact time when you should have bought more. But this chart shows that you don’t need to have perfect timing to win with investing – you just need to stick with it. None of us want to go through our lives alone – and you don’t have to invest alone either.

I hope that you are doing well, finding the good in life, and staying positive. We are grateful for the opportunity to help you plant that tree - one that can grow for many years to come.

« Back to Learning Center