While it may be difficult to list every major event of the year, hopefully we'll at least be able to remember the lessons learned from them. Specifically, the investing lessons applicable to the future as we try to make sense of the market's moves and the news driving them.
Here are some of the lessons TKer learned (or relearned) this year.
1. You can be a terrible market timer and do just fine
When I met with my accountant in February, I learned I had some room to lower my taxable income. One action I took was contributing more to my self-employed 401(k) plan. Wasting no time, I transferred some cash to that account, and on Feb. 18, I added to my S&P 500 index fund position.
The very next day, the stock market topped and proceeded to fall 20% before bottoming on April 8.
(Source: Yahoo Finance via TKer)
It's okay. Things appear to be working out. The S&P is up 10% since that purchase. It's a reminder that the market favors those who can put in the time.
2. Stocks are spending less time in the S&P 500
There's a lot of turnover in the S&P 500. The index regularly drops companies and replaces them with up-and-comers.
But the pace of this turnover has been picking up.
(Source: BofA via TKer)
From BofA: "The growing impact of disruptive companies can have downstream effects on incumbent companies. Roughly a third of the S&P 500 has been replaced since 2015. In 1958, the average seven-year rolling lifespan of a company on the S&P 500 was 61 years. By the 1980s, it had dropped to 30 years, by 2016 it was 24 years, and by 2021 it was 16 years. If we continue on this road, ...
