After decades analyzing markets, what's the most striking memory retiring Morningstar columnist, John Rekenthaler, carries with him about the stock market?
That the party always seemed to be over and the fear of having missed out is always present.
In his words,
That is my salient career memory: the perpetual belief that equity investors had missed the party. Yet, they never have.1
Of course, this doesn't mean they never will. Rekenthaler doesn't believe that equities will have the astronomical rise that they've had over the last nearly four decades.
But what you walk away with after reading his article is that though the stock market marched upward, there were reasons to sell, plenty of naysayers, and continual uncertainty along the way.
If you had invested $10,000 in the S&P 500 the month he started working at Morningstar, you’d have hundreds of thousands of dollars. Here’s the chart:
What drives this persistent growth? And why does Rekenthaler's outlook remain positive for the US market?"
He answers:
…one aspect of the US economy will almost certainly persist: the advantage to capital. For a long, long time in this nation, business owners have grown their wealth faster than have business workers. I see no indication that this condition will change.2
You may not want to start your own company. You may have no desire to run a business. But investing in the US stock market enables you to become an owner as a shareholder in American companies and potentially reap the rewards.
While there's no guarantee the party will continue, one certainty remains: as long as markets rise, there will always be voices predicting their imminent collapse. That's simply human nature.
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Sources:
1. “Farewell, for Now”, November 12, 2024. Accessed online: https://www.morningstar.com/columns/rekenthaler-report/farewell-now