Totally unprecedented, totally normal
At
the start of Q3, investors felt like they were staring over a cliff’s
edge — licking their wounds from a 20% drawdown, girding for a trade
war, and fretting about a global recession. Three months later, they’ve
memory-holed the trade war, embraced AI euphoria, and resumed partying
like it’s the roaring twenties. What a wild, unprecedented ride, huh?
That’s certainly been the media narrative. But if you survey the S&P 500 historically (see chart below), it turns out this is … totally normal.
Lest we forget, markets tend to rise by about 10% per year as a matter
of course, and most years it hits that number by mostly performing well above
10% — often as much as 20% — along with a brief plunge or two as big as
post-“Liberation Day” in April. The pattern is even more pronounced
with individual stocks. Take Nvidia, the market darling of the moment:
it started the year down 35%, and now it’s up 60%. Same story for Meta,
Oracle, and Microsoft. The lesson here: it pays to stay patient. |
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