On September 2, 2020

Should you be in the market?

by Kevin Theissen

Some people in recent weeks may have been feeling that “the stock market seems to be doing so well but I’m not participating.”

A look behind the headlines helps tell the story.

A CNBC study found that between the stock market high on Feb. 19, 2020—and the new market high on Aug. 18, 2020—only 38 percent of stocks in the Standard & Poor’s 500 index posted gains. By contrast, 62 percent showed losses.

The best performing sectors during the six-month period were consumer staples, health care, and information technology. If your portfolio was overweight in these groups, you may have outperformed.

Meanwhile, financials, energy, and utilities lagged behind.

Each year, some companies are big winners in the stock market and some can’t keep pace with the popular index. This year is no different.

However, we often don’t see such a wide divergence by the market averages. For example, the Nasdaq composite gained 26 percent through Aug. 21, 2020. That compares with an increase of roughly 5 percent for the S&P 500 and a slight loss for the Dow Jones Industrials.

Investors need to understand that it’s not about how the stock market performs. It’s about whether you are pursuing your financial goals based on your time horizon and risk tolerance. How the stock market moves from week-to-week, or month-to-month, should be of some interest but perhaps not an overriding concern.

You should regularly revisit your goals and make adjustments.

Kevin Theissen is the owner of HWC Financial in Ludlow.

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