Is This A Cure For Stock Market FOMO? | ETF Trends

By Rob Isbitts via

The S&P 500’s past 5 years have not been as great as some think

Ask most casual observers about the stock market, and you will probably hear two types of responses. Some will say it has been a great run the past many years, and their S&P 500 index fund has been a rock star in their portfolio. But, when you speak to others, you may get a bit of what we call FOMO, the fear of missing out. They acknowledge that the market has done well. But they are more concerned with making up for what they feel they missed out on.

I truly hope that I can help those with FOMO feel better about their investment experience over the past several years. I also hope that what you will see below will help you understand that reviewing your own investment performance is not about chasing returns. It is about viewing your own results in the context of what has actually happened.

A donut with 2 holes?

Here is a chart of the S&P 500 ETF (SPY) from the start of 2015 through last Friday, August 2, 2019. In other words, the past 4 years and 7 months. The total return over those 55 months: just over 55%. That’s right at 1% per month. Nice!

However, that is the proverbial donut. Below, I present the round, tasty part of the donut. From February 12, 2016 through January 26, 2018, the S&P’s return was about 53%. That is nearly 24% a year, compounded. That’s really great.

So, in that very fine 24 month stretch, the S&P 500 delivered nearly all of its gains from the start of 2015 through last Friday, August 2, 2019. During the other 31 months, your return in an S&P 500 Index fund: zippo.

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