Weekend Reading: Why Down & Sideways Markets are Bullish

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
Weekend reading down and sideways markets bullish Weekend reading down and sideways markets bullish
Weekend Reading

Today’s U.S. stock market can be described as a "down and sideways" market.

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Here’s why: Over the past 28 months, U.S. equities have remained flat, following a 20 percent decline in the previous nine months. This stagnant market has led to a general sense of indifference among investors, despite positive indicators such as the S&P 500 and NASDAQ 100 showing growth. Further, market volatility decreased over the past year, contributing to a growing complacency among investors.

Optimistic outlook: Historical data suggests that "down and sideways" markets are actually more bullish than they appear. Although these markets are relatively rare, they tend to have slightly higher future growth compared to other market periods. Looking at the future one-year growth of such markets, the median return has been 9.1 percent. Moral of the story? Down and sideways markets tend to lead to strong recoveries and that the current market environment is more likely to be short-lived.

You don’t need to let today’s market malaise impact your vibe. While there are no guarantees, data shows down and sideways markets can be one of the best times to stay invested or make further investments.