2020 was… um…well… it was a rollercoaster.
The S&P 500 had a daily close up or down of at least 1% (illustrated by the bar chart below the line graph), in 110 of this year’s 253 trading days, compared to just 38 days in 2019. That is what us financial nerds call Volatility. I think it is very important to look at where the biggest swings in those percentage changes are, because you’ll notice that the best performing days came right in the midst of some of the worst performing days back in March and April. If this song sounds familiar, it may be because you’ve heard me sing it a few times before. There is not a trader alive who can correctly time the market, which means investors are best served by ignoring what’s happening and knowing the big picture is much smoother.
In further proof that it’s important to clarify what you mean when you talk about “the market”, the three major US indexes produced dramatically different results.
The tech-heavy Nasdaq Composite gained 43.6% this year.
The S&P 500 closed 2020 with a 16.3% gain.
The 30 stock Dow rose 7.3% in 2020.