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Celebrating Women In Business Ask Amanda Vol. 1 Issue 28

Ask Amanda

Amanda Johnston

“This time will be different!” Who hasn’t said that before? Sometimes, though, people use this phrase when what they really mean is: “this time, I hope, will be different.” Unfortunately, though, history tends to repeat itself more often than not, and that’s certainly true where the stock market is concerned. Especially in 2020, now more than ever we have seen unprecedented volatility brought on by a global pandemic. No one saw that one coming. Furthermore, the Stock Market reacted dramatically, leaving many Americans breathless as they watched their 401k accounts drop by a third (approx. 35%). Luckily, the market has recovered (mostly) from the volatility we experienced earlier this year, but it has left many feeling uneasy in a very fragile market.

Over the years, a lot of people have used “this time will be different” to try to rationalize why the long-term secular bear market cycles we’ve witnessed throughout history would suddenly disappear, and the market become immune to such trends. In the 1920s, for example, forecasters predicted that the advent of trucks would impact the economy in such a way that the bull market of the Roaring 20s would last forever. Then came the crash of ’29 and the onset of another 25-year zero-growth secular bear market. People said the same thing about airplanes in the 60s, and computers in the 90s, but all the optimistic declarations in the world couldn’t stop the long-term secular bear cycle that began in 1966, or the one that started in 2000. In both cases, history did repeat itself. What will “save” us this time?

What are the odds that this time will be different? Allow me to answer that for you: slim to none. Now here’s the good news: you can achieve reasonable growth and reliable income from your investments without the risk of participating in the stock market.