The Soothsayer's Super Bowl - Marty Moore, Carroll Financial
February 2, 2021

The Soothsayer’s Super Bowl

Author: Marty Moore, CFP®

For financial and market forecasters, the month of January is their Super Bowl.  While the Chiefs and Buccaneers are preparing their game plans for this Sunday’s big match, so too are the market gurus laying out their game plan (predictions) for the upcoming year.

This year is a lot different though.  Even the boldest and most confident market prognosticators realize forecasting 2021 is folly.  It won’t stop them though.  The temptation to appear on CNBC is too great.  They’ll lead with: “These are unprecedented times and it’s difficult to predict how the markets may behave this year… “, but that won’t keep them from going on to then telling you exactly what they think will happen.

What market expert, someone who has consistently been able to foretell how the upcoming year will play out, are you going to listen to?

(Take your time … I’ll wait.)

How can you predict the unpredictable?

Over time, the U.S. stock market has been a consistent compounding machine.

Last 5 years (2016 – 2020):                 15.1% average annual return
Last 10 years (2011-2020):                 13.7%
Last 20 years (2001 – 2020):                 6.0%
Last 30 years (1991 – 2020):               10.4%
Last 50 years (1971 – 2020):                 9.9%

(Source: S&P 500 Index, Morningstar, Inc.)

It is, however, anything but consistent from year to year:

The above chart covers the last forty-one years in the market (return of the S&P 500).  How many calendar years has the market returned anywhere close to its long run average of about 10%?  Only about 4-5 times.  All other years have been above or below, sometimes by a lot.  Forecasting the short-term is hard.  No, it’s impossible, really.  Actually, it’s folly.

The most important data point

The above chart highlights in gray the annual return of the S&P 500, but the most important piece of information is highlighted in red.  These are the largest declines, from peak to trough, that occurred during that year.  The average annual decline over this period is 14.3%.

So, every year you can expect an aggressive, 100% equity account to go down by about 14% sometime during the year.  Some years less, but some years a lot more potentially.

Last year the S&P 500 declined 34% in March yet ended the year up 18%.

What about less aggressive strategies?

While the S&P 500 was down 34%, here are the declines during that period for less aggressive strategies.

80% stocks / 20% bonds:         – 27.6%
60% stocks / 40% bonds:         – 20.9%
40% stocks / 60% bonds:         – 14.3%

(Source: YCharts, using the S&P 500 and Barclays Aggregate Bond Index)

With interest rates remaining at historical lows, bonds are not earning much right now.  But they provide important diversification benefits and can cushion the decline during a big market selloff.

Money Isn’t Everything

It is important though, of course.  But how do we know it has the right importance in our life?
In a recent article by financial writer Jonathan Clements, he outlined 11 signs that he thinks we have it about right when:

  1. We aren’t jealous of others or lust after the things they have.
  2. We borrow when we must – but we never borrow so much that we stress ourselves out today or put our future self at risk.
  3. We consciously spend a little less today so that we can enjoy the long-run happiness that comes with money in the bank and the knowledge that we can cope with financial adversity.
  4. When there’s a big down day in the markets, we might feel anxious – but it doesn’t wreck our day or ruin our sleep.
  5. We view money as a way to improve our life, rather than an obstacle that constantly holds us back.
  6. We spend after pondering the alternatives – but, truth be told, thoughts of spending don’t consume much of our time.
  7. We don’t fret about how we’ll pay the monthly bills or how we’ll cope with surprise expenses.
  8. When we look at our portfolio, we feel more contentment about what we have than fear about what the future might bring.
  9. We usually spend without guilt or subsequent regret.
  10. We know what our financial goals are and we’re confident we’ll get there.
  11. We feel we’re in charge of our finances – not the other way around.


With the vaccine now being given we all hope for the light at the end of the tunnel that leads us back to a more normal day-to-day life.  In the meantime, while we’re stuck at home more than we would like, here’s some short reads, and one video presentation, that I can highly recommend. 

It’s unfortunate that much of what we hear and read about coronavirus is so politicized.  So, it’s nice to hear expert opinion of someone without an underlying agenda.  The link below takes you to a video presentation by Finny Kuruvilla, MD, PHD and Chief Officer for Eventide Funds.  Dr. Kuruvilla has a unique background in healthcare and investment management.  You can read about his background here:

There is an update on his current perspective of coronavirus in general as well as information on how the vaccine works, side effects, how the vaccine trials were conducted, and the current status and success of distribution.

Video presentation (30 minutes):

I have often cited the writings of Morgan Housel.  Here are three short essays (no more than a few minutes each) that are insightful, instructional and enjoyable.  I highly recommend.

Two Worlds: So Much Prosperity, So Much Skepticism

The Big Lessons From History

In the end…

Alex Trebek, the beloved host of Jeopardy for 37 years, died last year after a two-year battle with pancreatic cancer.  While he is greatly admired and will be remembered for his positivity and courage in battling his disease, few people know of his early career before he became the host of Jeopardy.

The next time you feel discouraged about your career, or know of someone who is, remember this: Alex Trebek did not become host of Jeopardy until he was 44 years old, yet he went on to become the greatest game show host in television history.  What prepared him for this achievement?  Many will say his determination and perseverance.  Here is a list of just some of his (many, many) jobs and shorter hosting stints prior to landing Jeopardy.

1963 – 1964:   Music Hop
1964:               Vacation Time (co-host)
1966 – 1973:   Reach for the Top
1969:               Barris & Company (co-host)
1969:               Strategy
1971:               Pick and Choose
1972:               Outside/Inside
1973:               The Wizard of Odds
1974 – 1976:   High Rollers
1976 – 1977:   Double Dare
1978 – 1980:   High Rollers (again)
1976 – 1980:   Stars on Ice
1977 – 1978:   The $128,000 Question
1980 – 1981:   Pitfall
1981 – 1983:   Battle-Stars

Determination and perseverance.

And finally…

Words of wisdom:
            “The hardest arithmetic to master is that which enables us to count our blessings.”  Eric Hoffer

As always, thanks for reading.


Required Disclosures:

All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.
The S&P 500 Index is a capitalization‐weighted index made up of 500 widely held large‐cap U.S. stocks in the Industrials, Transportation, Utilities and Financials sectors.
The Dow Jones Industrial Average is a widely followed market indicator based on a price-weighted average of 30 blue-chip stocks that trade on the New York Stock Exchange which are selected by editors of The Wall Street Journal.
A diversified portfolio does not assure a profit or protect against loss in a declining market.
Asset allocation is an investment strategy that will not guarantee a profit or protect you from loss.
You cannot invest directly in an index. Additional risks are associated with international investing, such as currency fluctuations, political and economic stability and differences in accounting standards all of which are magnified in emerging markets.
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