Perhaps it’s fitting that so few people have bothered to mark the anniversary of the 10-year stock market bull run that we have all been enjoying. This has been regularly described as the bull market nobody loves, after all.
Cheap money
People don’t love it because they don’t trust it, and they don’t trust it because they know it has been fuelled by near-zero interest rates and other monetary stimulus such as QE.
Despite that, the market has powered on for a decade, ever since central bankers around the world launched their rescue package at the height of the financial crisis in March 2009. It is now the longest bull run in history, and you will hopefully see the results in your portfolio.
Massive returns
The benchmark FTSE 100 has delivered a total return of around 170%, while UK smaller companies grew 350%. The S&P index of top 500 US stocks delivered a total 369%, with the red hot technology sector that includes giants Facebook, Amazon, Apple, Netflix and Google-owner Alphabet returning 650%.
If you had left money in cash during that time, you might have got, say, 10%. That’s why we at the Fool believe stocks and shares trounce pretty much every other investment over the longer run. You have to look past the scary short-term volatility to the sunlit uplands beyond.
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Get stuck in
This bull run still refuses to die. Which is astonishing, given how often investment analysts have read the last rites and the widespread gloom over the slowing global economy.
Many investors are now sitting on the sidelines, waiting for a crash before committing their money. The problem is you could be waiting a long time. Years, maybe. During that time you will be lucky to get 1.5% on cash, while the FTSE 100 currently yields 4.13%, with any capital growth on top of that.
Stock markets are impossible to second guess. They might crash tomorrow, next year, or five years after. Nobody knows. You can’t play that game, it will drive you crazy.
Little and often
The best way to invest is to pay in relatively small amounts whenever you have money to spare. And take advantage of any price falls to pick up stock on the cheap.
Alternatively, you can set up a regular monthly payment. That way you shouldn’t even notice the money leaving your bank account and won’t have to worry about markets falling at all, in fact, dips could work in your favour as you will pick up more stock for the same monthly payment.
Stock markets have stabilised lately, as the US Federal Reserve takes a softer line on interest rate hikes, while the European Central Bank continues to keep the continent’s economy on life support with yet more stimulus. Crash averted, once again.
Investors have been calling an end to the bull market for years, but those who listened and stuck to cash have lost out. This bull market could have further to run. Even if it finally comes to a close, you should keep invested. Another one will come along soon.
