QQQ - S&P 500: Stock Returns Defense And 'Long-Term Investing'

2024-04-23 14:51:23 ET

Summary

• Investors tend to look at S&P 500 returns in cookie-cutter time frames, rather than ones I consider more meaningful for investment stress-testing.
• Nearly half the S&P 500 stocks are down since the start of 2022, and only 38% have produced more than a 5% return (what T-bills yield now).
• Since the start of the pandemic, returns are lower than many realize. And every S&P 500 stock has had least 20% drawdown, with a median drop of 47%.
• This, and the mediocre returns of asset allocation strategies, are signals to me that investors need to learn more about playing investment defense. I explain some of my techniques.

I have responded to more than 1,900 audience comments over the past year. It has been, for the most part, a fantastic experience. And since I feel like I've immersed myself into the Seeking Alpha community like a guitarist in a mosh pit (I wish!), I can now start to angle some of my articles toward helping identify and provide my personal opinions about the more "frequently asked questions" I receive.

One important and timely instance of this is the topic of playing investment "defense," in the context of being a long-term investor. Because there are suppositions and facts, and when I did a deep dive (no mosh pit) into the inner workings of S&P 500 performance over two very telling time frames, I saw what I expected to see, but what I suspect many part-time or casual, index-buying investors would be surprised to hear about....

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