Financial Planning & Wealth Management

Put These Charts on Your Wall

Keeping a few charts that showcase extreme market behaviors on your wall can serve as a valuable reminder: in markets, nothing is ever guaranteed. There’s no such thing as “can’t,” “won’t,” or “has to” when it comes to price movements.

 

The market operates on its own terms, often defying expectations. It reflects the real-time interplay of human emotions—fear and greed prominently driving its behavior.

 

This unpredictability is what makes investing both challenging and fascinating. There are moments when a healthy dose of skepticism is necessary, and other times when you need to set doubts aside. Unfortunately, there’s no guidebook to help determine which approach to take in any given situation.

 

To illustrate this, here are 5 charts from 2024 that highlight the market’s knack for doing the unexpected, often in stark contrast to expert predictions or common beliefs:

 

  1. Are all-time highs a signal to sell? Following this strategy would likely leave you worse off.

2. Emerging markets can’t continue underperforming indefinitely. But they continue to underperform.

3. The US can’t keep outperforming the rest of the world. Yet it has.

4. The long-term stock market average return is 10%, so you should expect 10% annually. The reality is more complex.

5. Avoiding the market altogether by stashing cash under the mattress keeps your money safe. Not when inflation is in play.

I hope everyone had a restful break and wish you a prosperous start to 2025. 

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About

 MattFin is a blog that focuses on wealth management, investments, financial markets and investor psychology. I build financial plans and portfolios for families and individuals

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