I know what you’re really thinking. The real question is how long WILL it take?
The answer is hated: no one knows.
But arithmetic tells us how long it WOULD take.
Since the end of January 2023 as the above chart shows1, we would need about a 19% return on the S&P 500 this year to get back to where we were in January of 2022.
Not likely, but not an impossibility either.
We’ve had that kind of calendar return four times2 in the last decade or so.
- 30% in 2013
- 19% in 2017
- 29% In 2019
- 27% in 2021
“Times were different then.” Yes.
They always are.
What if the markets did what they normally average? Well, since they average over 10% a year, it would just take a couple years.
Good to hear.
Remember that the average is rarely ever hit in real time though. (See a past article of mine on that very topic).
Even if the stock market struggled badly and earned the worst spot on our above chart of 5% annualized, it would take about 5 years.
Remember too that many have a diversified portfolio and you likely aren’t 100% in the S&P 500, but at least this gives us a bit to work with.
Be patient. Be consistent. Watch out for snake oil optimists and apocalyptic pessimists.
Prepare for the best and hope even in the worst.
- JP Morgan Chase, “Guide to the Markets” (As of 1/31/2023). https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/