• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

BRIO Financial Planning

Fee-Only Financial Planning Services in Quincy, MA

  • Home
  • About
    • About Michelle
    • About You
    • Our Services
    • Our Pledge to Clients
  • Financial Planning
  • Investment Advice
    • Why Dimensional Funds?
    • Functional Asset Allocation
  • Taxes
  • Blog
  • Contact Us

When Will The Stock Market Get Back to “Normal”?

November 5, 2015 by Michelle Morris

Hello!

Unless you live under a rock, you’ve probably heard about the ups and downs in the stock market in 2015.  In the US we reached some all-time highs earlier this year, followed by some gut-wrenching drops, followed most recently by some recovery as of this writing.

What will the near-term bring for the stock market?  I have no idea. (And neither does anybody else).   But if you are waiting for the stock market to “settle down” before making investment decisions, you may be waiting a looooong time.

Best,

Michelle Morris, CFP®, EA
BRIO Financial Planning

My fellow financial planners and I frequently talk to clients about “average returns” in the stock and bond markets when we discuss investments.

Unfortunately, this terminology may give clients the false impression that such returns are normal.  When it comes to the stock market the most frequent result is nowhere near “average”.  (In nerdy math speak, we say the returns have a high standard deviation).

Take a look at this graph from Vanguard:

november graphic

You can see there are more up years than down years. The broad US stock market returned average annualized return of 10.24% in the 89 years from 1926-2014.   Pretty darn good!  Remarkably if you could have invested $1 in 1926 it would have grown to $5,863 by the end of 2014! 

Now look at how many individual years fell within +/-2% of the average. These are the red bars on the graph.  Only 6!  In other words, 83 times out of 89 the year’s return fell somewhere well outside of “average”.  I might be an old lady before we have another “average” year!


So the next time you hear a commentator shrieking about big swings in the stock market, remind yourself “this is normal”.
Historically, over time, the stock market rewards those who participate.  But the ride is often bumpy.
 
What is your strategy for the bumps?

Do you have adequate cash on hand for near-term needs?  Do you have a well-diversified balanced portfolio?

A well-diversified portfolio contains more than just US stocks.  Adding asset classes can help smooth out the bumps.  There is no one “perfect” plan, but sticking with your plan through all market conditions is one of the keys to investment success.

You can learn more about the above graph from Vanguard HERE

Topics: Filed Under: Investing

Previous Post: « Money Can’t Buy Happiness – Or Can It?
Next Post: Uncle Horace Died and Left You His IRA. Now What? »

Primary Sidebar

Sign Up for the BRIO Email Newsletter!

Sign up for my monthly newsletter “Allegro con brio” and get a FREE copy of my report: “8 Ways for the Single Woman to Guarantee She Will Never be Financially Independent”.

  • This field is for validation purposes and should be left unchanged.

From The Blog

  • How Much Federal Income Tax Do You Actually Pay?
  • How Much Does your Employer-Sponsored Health Insurance Actually Cost?
  • Are Stock Market Predictions Useful?
  • Is Your Financial Life Too Complicated?

Footer

From the Blog

  • How Much Federal Income Tax Do You Actually Pay?
  • How Much Does your Employer-Sponsored Health Insurance Actually Cost?
  • Are Stock Market Predictions Useful?

Important Legal Information

Investment advisory products and services are offered through advisory representatives of BRIO Financial Planning, an investment advisor registered with the Commonwealth of Massachusetts.

Disclosures and Other Legal Terms

Contact Us

Michelle Morris, CFP® EA
BRIO Financial Planning
1073 Hancock St. #101
Quincy, MA 02169

michelle@briofp.com
617-934-0419 (phone)
617-934-1933 (fax)

  • Email
  • Facebook
  • LinkedIn
  • Phone
  • Twitter

Copyright © 2025 · BRIO Financial Planning · All Rights Reserved.