NWP Monthly Digest | January 2020
Happy New Decade
What a crazy week, right? The start of a new year and a new decade…all at the stroke of midnight as Tuesday turned into Wednesday. A little birdie told us that can only happen once every ten years. Your crack team at Noble Wealth Partners will happily verify that this is accurate.
But was it the start of a new decade? I had a lively debate with a friend about this on New Year’s Eve, and it’s a been a popular topic to disagree on via social media for some time now. How do you measure the decade? Did it start on January 1st of 2010 and end on December 31st of 2019? Or did it start on 1/1/2011 and not actually end until 12/31 of this year?
Here’s how the argument goes:
Nobody ever talks about year zero, right? So, therefore, the 1st year of the Gregorian calendar is actually year 1, and the first decade ended on 12/31/0010.
How can this decade start on 1/1/2020 if that holds true? It can’t, and thus the year 2020 is the last year of the current decade, and 2021 will be the start of the new decade.
Perhaps. I’m not one to quibble about these things as it easily can turn into a discussion about religion and could go south in a hurry. Since 2,000 years is a long time, I’m going to ignore this whole “year zero vs. year 1” stuff and go with what sounds better. We seem to like to name our decades and after waiting 20 long years, we actually have one that sounds fun again. Welcome to the new Roaring 20s, everyone. The “oughts” and the “teens” never sounded right, anyway.
Tim Urban of Wait but Why? wrote a delightful piece called It’s 2020 and You’re in the Future. Check it out for more fun facts about the passage of time.
Why do we care about decades? Well, it does make it easy for our brains to compartmentalize certain eras, for one. Also of importance in my line of work — ten years is actually starting to represent a time-frame that is worthwhile to examine progress made on a financial plan or with your investment performance.
By most measures, the stock market has had a very nice run for the last ten years during a decade that didn’t see one single recession and a decade that the S&P 500 had a cumulative total return of 256%, or about 14% per year. Pretty darned good, but not better than the 50s, 80s, or 90s.
Here’s the breakdown, rounded up to whole numbers:
What I find the most interesting about looking at the previous decades (or eras) of investing is that as good as the last decade was, it most certainly wasn’t the best. For all the people that keep saying “we’re due” for a market drop, the 1990s have something to say about that. Despite rip roaring stock market performance in the 80s, the 1990s were even better.
The stock market isn’t looking at the calendar, and neither is the economy. Are we “due” for a recession or a stock market pullback? I’ve been guilty of saying this exact thing over the last couple of years, but I think it’s foolish to assume we’re due for anything.
I’m confident in saying we most certainly will experience a bear market and a recession at some point in the future, but it isn’t going to happen because we keep pointing out how long it’s been since the last one. Australia’s economy hasn’t seen a recession in 27 years.
As the saying goes, bull markets don’t die of old age.
Happy New Decade to you and yours.
Our Noble Wealth Pro Tip for January
The start of a new year is an excellent opportunity to get your financial house in order. Do you know your Net Worth? Do you even know how many financial accounts you hold between banks, credit cards, and investments? There are amazing software tools available right now (most for free) that will help you get everything together in one place so you can get a better understanding of what your personal financial profile actually looks like. We offer a client portal you can use through our financial planning software called RightCapital. Get started today by clicking here.
Things we’re reading and enjoying…
Why We Sleep by Matthew Walker, PhD - A New York Times bestseller and international sensation, this “stimulating and important book” (Financial Times) from the director of UC Berkeley’s Center for Human Sleep Science is a fascinating dive into the purpose and power of slumber. As the Guardian said, Walker explains “how a good night's shut-eye can make us cleverer, more attractive, slimmer, happier, healthier, and ward off cancer.”
It’s 2020 and You’re in the Future by Tim Urban, Wait but Why? - We now live in the 20s! It’s exciting. “The twenties” is super legit-sounding, and it’s so old school. The 40s are old. The 30s even more so. But nothing is older school than the Roaring 20s.
What we’ve been up to…
Grant continues to be very active with the CFA Society of Colorado and participated in several presentations as the year (and the decade) came to a close on everything from understanding the major themes impacting the global investment landscape to getting a more granular view on the cannabis/marijuana industry and the changes it’s about to go under as the industry matures.