"The easy money has been made."
You've probably heard this line lately. The thinking goes something like this -- stocks have gone up in a straight line for the last nine years, which means we're overdue for a correction or a bear market; at the very least, it will be much harder to make money going forward. Looking back, the chart below does make it look easy to have prospered from stocks.
But smart investors know the reality is far different. Yes, stocks have gone up a lot since 2009 ($1 has grown to $3.16). But they went down a lot in 2008 ($1 went down to $0.59). That's risk and return. Every step of the way since 2009, we were told that the market would fall and the easy money had been made. Here's that headline every year since 2009:
source: Morgan Housel
You had to be incredibly disciplined to profit from stocks over the last nine years. Only with hindsight does it look easy.
Of course, we know at some point the stock market will fall. But predicting precisely when it will happen, how far it will drop, and when it will begin to recover is the problem -- no one can consistently forecast any of these variables, let alone all of them. However, as we've said repeatedly, you don't have to try and predict these things. If you hold a diversified portfolio that is appropriate for your long-term goals, and you're able to stay disciplined during turbulent times, the odds are high that you will achieve financial success. It will never be easy, but nothing worthwhile ever is.
Past performance is not a guarantee of future results. Index and mutual fund performance