“Spinning Wheel" is a 1968 song from the band Blood, Sweat & Tears. It was written by Canadian lead vocalist David Clayton-Thomas and appeared on their album of the same title. Released as a single in 1969, it peaked at No.2 on the Billboard Hot 100 chart in July of that year, where it remained for three weeks.
Clayton-Thomas was quoted as describing the song as being "written in an age when psychedelic imagery was all over lyrics ... it was my way of saying, 'Don't get too caught up, because everything comes full circle'." Interestingly, the song was also recorded by artists as diverse as Peggy Lee, Sammy Davis Jr, Shirley Bassey, James Brown, and even Barbara Eden of TV’s I Dream of Jeannie.
The song is instantly recognizable from its opening lyrics. A YouTube link to the song is included below as well for your reminiscing and listening enjoyment.
What goes up must come down
Spinning Wheel got to go 'round
Talkin' 'bout your troubles
It's a cryin' sin
Ride a painted pony
Let the Spinning Wheel spin
Many people have felt similarly about the markets over the last two years, they just go up and down. Despite all the negative headlines and economic events we have lived through, the market has basically been flat over the last two years, as measured by the S&P 500 index. As you can see in the chart below, from June 1st, 2021, to June 1st of this year, we had a lot of ups and downs but ended up back where we started. What went up, also went down… just like the song lyrics say.
There are a couple of things I want to remind you of in this type of environment. The first is about the mathematics of loss. If something was worth $100 and went down 20%, its value would drop to $80. If it then rose in value by 20%, it would now be worth $96. Going up and down at the same rate time after time actually results in losing money, as you can see in the chart below.
I tell my clients on a regular basis that MATH MATTERS. It is important for your gains to outpace your losses over time. In fact, the mutual fund research company, Morningstar, uses a measurement tool called upside capture vs downside capture to help us screen for investments that may provide a better probability of success as we construct our portfolios.
The second thing to remember is that the markets work in your favor over our economic and business cycles. As you can see in our final chart for today from our friends at Capital Group, aka The American Funds, the ups of the market during times of economic growth far exceed the losses during recessions and times of economic dislocation, even though the downs always feel worse.
The gains outpaced the losses, both in duration and magnitude, but only if you are invested throughout the entire cycle. This requires patience, discipline, and a belief that free market, capitalist economies produce superior returns.
Returning to our song’s lyrics.
You got no money, you got no home
Spinning Wheel all alone
Talkin' 'bout your troubles and you
You never learn
Ride a painted pony
Let the Spinning Wheel turn
The CFPs of Impel Wealth Management are here to help you make good decisions during the inevitable ups and downs of the market cycles. It is extremely important to remember the math lesson above. To be successful in the long run, what goes up needs to exceed what goes down. We thought this was an important reminder as we continue “Moving Life Forward”.
© 2023 Jesse Hurst
The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
Investors cannot directly invest in indices.