The song “Time Is On My Side” was written by Norman Meade and first recorded by a jazz trombonist named Kai Winding and his Orchestra in 1963. Over the next two years, it was covered by both soul singer Irma Thomas from New Orleans, a contemporary of both Aretha Franklin and Etta James, and more famously by the Rolling Stones in 1964.
A video clip of Ed Sullivan introducing the Rolling Stones performing this song is included below as a reminder.
Just as Irma Thomas and the Rolling Stones sang, time is certainly on your side when it comes to the stock market. From a historical basis, the longer your timeframe for investing is, the more favorable your odds become for a positive outcome.
BTN research looked at the S&P 500 index over the 72-years starting in January 1950 and ending in December 2021. Below is a summary of their findings:
- During that time, the broad stock market measured by the index was up 54% of all trading days and down 46% of the time. If you increased your holding period from a single day to a month your odds of a positive return went to 61%, while the market was down just 39% of the time.
- On a quarterly basis the odds of a positive outcome increased to 67%, with negative returns happening 33% of the time. And if you’re holding for the index was one year, the odds of a positive return increased to 74% with the negative returns 26% of the time.
- If we look to rolling five-year periods of time your probability goes to 79% up and 21% down. Finally, ten-year rolling periods of time produced positive returns 89% of the time.
This is an important reminder that during times of volatility, dislocation, and geopolitical uncertainty, it is important to remember that investing is a long-term venture. Many times, clients think they must get considerably more conservative as they move into their retirement years. However, recent life expectancy statistics show that for a married couple, both age 65, there is a 50% probability that one of them will live to age 90.
This means that the average retiree should still think of their timeline for investment as being 20 to 30 years. Based on the statistics above, this would lead people to be long-term investors in quality companies with growing earnings to build their wealth throughout their lifetimes. This will likely benefit both them and their heirs down the road.
While being a long-term investor is relatively simple, it is sometimes not easily done during emotionally charged times. This is exacerbated by the news and noise of the media. However, we want to help our clients pursue activities contrary to the masses. For if the masses were right, the masses would be rich. By and large they are not. So, let’s endeavor to pursue different behaviors.
As the most successful investor of our lifetimes, Warren Buffett has said:
We wanted to share this information and let you know that we are here to help you, our trusted friends and clients. It is oftentimes your activities, or lack thereof, that lead to long term success. It is an important reminder as we continue “Moving Life Forward”.
© 2022 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 invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.