Latest news with #AmericanAssociationofIndividualInvestors
Yahoo
29-05-2025
- Business
- Yahoo
3 Unstoppable Vanguard ETFs I'm Buying and Holding Forever -- Even if a Recession Is Coming
With the market fluctuating wildly, it's more important than ever to invest in the right places. ETFs can help balance risk and reward, especially during periods of volatility Even if a recession is coming, I'm continuing to stock up on these three Vanguard funds. 10 stocks we like better than Vanguard Information Technology ETF › If the recent stock market rollercoaster has you feeling nauseated, you're not alone. Investor sentiment has been swinging wildly in recent months, with 43% of investors feeling optimistic about the market in January to only 19% in March to around 38% most recently, according to weekly surveys from the American Association of Individual Investors. Recession probabilities have also shifted substantially. In March, analysts at J.P. Morgan estimated a 40% chance of a recession beginning in 2025. That number then increased to 60% in April, and as of May 19, it's now down to "below 50%." Much of the volatility centers around tariff policies, which, as we've seen in recent months, can change on a dime. Rather than trying to invest at just the right moment, it's often safer to stay in the market for the long haul, regardless of what happens in the coming weeks or months. If you're looking for a few Vanguard ETFs that can provide some stability while still supercharging your savings, these are three that I'm planning to buy and hold for as long as I can -- even if a recession is looming. During periods of volatility, one of the safer funds you can own is an S&P 500 ETF. The Vanguard S&P 500 ETF (NYSEMKT: VOO) tracks the S&P 500 (SNPINDEX: ^GSPC), meaning it includes stocks from all 500 companies within the index. Companies within the S&P 500 are industry leaders and among the largest stocks in the world, which can reduce your risk substantially. Many of these businesses have been around for decades, surviving several recessions and bear markets along the way. If any stocks are likely to survive future volatility, it's those in the S&P 500. The Vanguard S&P 500 ETF, specifically, can be a smart buy due to its low fees. Its expense ratio is just 0.03%, meaning you'll pay $3 per year in fees for every $10,000 in your account. With some funds charging expense ratios of 1% or more, the Vanguard S&P 500 ETF could help save you thousands of dollars in fees over time. The Vanguard Growth ETF (NYSEMKT: VUG) is a broadly diversified fund that spans multiple market sectors, with a focus on stocks that have the potential for above-average returns. It contains 166 stocks, with around 57% of them coming from the tech industry. (For context, only around 30% of the Vanguard S&P 500 ETF is dedicated to the tech sector.) One of the advantages of this fund is that it's diverse enough to help limit risk, but the heavy focus on tech stocks can still set you up for substantial returns. With over 100 stocks from 11 different sectors, you won't be hit quite as hard if one industry or stock takes a substantial blow. At the same time, though, if tech stocks continue to thrive like they have in recent decades, you could earn significantly higher-than-average returns. Over the past 10 years alone, the Vanguard Growth ETF has earned total returns of close to 279% -- compared to just 181% for the Vanguard S&P 500 ETF. If you had invested $10,000 back then, you'd have around $38,000 or $28,000, respectively, by today. The Vanguard Information Technology ETF (NYSEMKT: VGT) goes all-in on tech, with 307 stocks from all corners of the technology industry. This ETF is the riskiest of the three, but it also has the most potential for higher earnings. Over the last 10 years, it's more than doubled the total returns of the S&P 500 while also significantly outperforming the Vanguard Growth ETF. If you'd invested $10,000 in this ETF a decade ago, you'd have close to $56,000 by today. The caveat with this ETF, though, is its risk level. Investing solely in one industry -- especially the tech sector -- raises your risk substantially. Tech stocks are often hit hardest during market downturns, so if you invest in this ETF, be prepared for greater short-term volatility. That said, it can be a smart addition to an already well-balanced portfolio. Investing in the Vanguard Information Technology ETF along with the S&P 500 ETF, for example, can provide greater protection against recessions as well as potential for above-average returns. There's no way to know for sure whether a recession or bear market is looming later this year, but it doesn't hurt to prepare your portfolio just in case. By balancing risk and reward while keeping a long-term outlook, you're more likely to pull through anything the market throws at you. Before you buy stock in Vanguard Information Technology ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard Information Technology ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,389!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $830,492!* Now, it's worth noting Stock Advisor's total average return is 982% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Katie Brockman has positions in Vanguard Index Funds-Vanguard Growth ETF, Vanguard Information Technology ETF, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard Index Funds-Vanguard Growth ETF and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy. 3 Unstoppable Vanguard ETFs I'm Buying and Holding Forever -- Even if a Recession Is Coming was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
16-05-2025
- Business
- Yahoo
The Stock Market Just Did Something Never Seen Before, but History Offers a Clue About What Happens Next
The weekly AAII Sentiment Survey has recorded bearish sentiment readings above 50% for 11 consecutive weeks for the first time in history. Pessimism often precedes stock market gains; the S&P 500 has returned an average of 16% during the 12 months following bearish sentiment readings above 50%. Tariffs imposed by the Trump administration have raised the average tax on U.S. imports to its highest level since 1941, and that will likely be a headwind for the stock market. 10 stocks we like better than S&P 500 Index › The American Association of Individual Investors (AAII) conducts weekly sentiment surveys. Participants are asked a single question: Do you feel the direction of the stock market over the next six months will be up (bullish), no change (neutral), or down (bearish)? The results are published every Thursday. Bearish sentiment has topped 50% in 11 consecutive weeks as of May 8. The stock market has never inspired such peristent pessimism at any point since the AAII began conducting surveys in 1987. The previous record was a seven-week stint during the bear market of 1990. There were also five-week stints during the Great Recession in 2008 and bear market of 2022. That puts the stock market in uncharted territory. But history offers a clue about what happens next: The S&P 500 (SNPINDEX: ^GSPC) has typically rocketed higher in the year following bearish sentiment readings above 50%. Here are the important details. The American Association of Individual Investors (AAII) started collecting market sentiment data in July 1987. Bearish sentiment has since topped 50% in only 96 of 1,971 weekly surveys, which is less than 5% of the time. Importantly, 11 of those 96 readings have come this year. That sounds alarming, but sentiment is considered a contrarian indicator because the stock market has historically performed well after periods of heightened pessimism. Put differently, investors frequently become too gloomy in response to negative news. Here's the median return in the S&P 500 over the six-month and 12-month periods following bearish sentiment readings above 50%: Median six-month return: 7%. Median 12-month return: 16%. Here's what that data implies about the present situation: The S&P 500 closed at 5,862 on February 27, which was the publication date of the first AAII survey in 2025 to show bearish sentiment above 50%. The S&P 500 will climb 16% to 6,799 by next February if its performance matches the historical median. That implies about 15% upside from its current level of 5,887 as of May 13. The stock market has been hammered by economic uncertainty created by President Trump's trade agenda. The AAII survey recorded its first bearish sentiment reading above 50% in late February after his administration announced stiff tariffs on goods from China, Canada, and Mexico, as well as duties on aluminum, steel, and auto imports. Bearish sentiment stayed above 50% throughout March and April as President Trump took a more aggressive stance on trade and other countries took retaliatory action. The most surprising development was the slate of "Liberation Day" tariffs the administration unveiled in early April, which included a 10% baseline tax and higher country-specific duties. The president also raised the total tariff on Chinese imports to 145%. Importantly, Trump has walked back several on those tariffs. The country-specific duties were paused for 90 days in early April, and tariffs on Chinese imports were temporarily lowered to about 35% (for 90 days) in early May. Yet, bearish sentiment has remained above 50% because the constant back-and-forth has unsettled investors nearly as much as the tariffs themselves. While stocks have undoubtedly benefited from Trump softening his stance on trade policy in recent weeks, investors should bear in mind the average tax on U.S. is still at its highest level since 1941, according to the nonprofit Tax Foundation. Most economists think those tariffs will raise prices and slow economic growth, potentially to the point of recession. Here's the bottom line: Investors have been persistently pessimistic since late February. Bearish sentiment has exceeded 50% in 11 straight weeks for the first time in history. On one hand, high levels of pessimism are often followed by strong returns in the S&P 500. On the other hand, tariffs still pose a potential threat to the stock market. Investors need to reconcile those opposing views when making decisions. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $613,951!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $796,353!* Now, it's worth noting Stock Advisor's total average return is 948% — a market-crushing outperformance compared to 170% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. The Stock Market Just Did Something Never Seen Before, but History Offers a Clue About What Happens Next was originally published by The Motley Fool
Yahoo
15-05-2025
- Business
- Yahoo
Prediction: This Warren Buffett-Approved Index Fund Will Survive Any Recession or Stock Market Crash
If a recession is looming, the right strategy is key to ensuring your portfolio survives. Index funds can be a smart way to limit risk while building long-term wealth. There's one fund highly recommended by Warren Buffett that could be a fantastic buy right now. 10 stocks we like better than S&P 500 Index › Recession concerns are ramping up, with more than half of U.S. investors feeling "bearish" about the upcoming six months, according to a May 2025 survey from the American Association of Individual Investors. Experts are also issuing warnings about the economy, with J.P. Morgan analysts predicting a 60% probability of a recession in 2025 -- up from their previous estimate of 40%. Goldman Sachs also hiked their estimates from 20% to 45%, rattling some investors. To be clear, we're not in a recession yet, and despite increased risk, there's no promise we'll face one at all. But it's still smart to prepare just in case, and there's one index fund with glowing recommendations from Warren Buffett that is all but guaranteed to survive even a severe recession or market crash. If you're looking for an unshakeable investment with a flawless track record of surviving periods of economic uncertainty, the S&P 500 index fund is a fantastic choice. An index fund is a collection of stocks that track a particular stock market index -- like the S&P 500 (SNPINDEX: ^GSPC) -- and there are a few clear advantages of investing in this type of fund: It's an easy way to diversify your portfolio: The S&P 500 itself includes 500 of the largest and strongest companies in the U.S., across a wide variety of industries. When you invest in an S&P 500 index fund, you'll instantly own a stake in all 500 of those companies. Greater diversification can limit your risk, especially during periods of volatility. The S&P 500 is a powerhouse index: Because the companies within the S&P 500 are among the strongest in the world, they are incredibly likely to pull through market slumps and economic rough patches. While the index may be hit hard in the short term, there's never been a downturn the S&P 500 hasn't managed to survive. There's no guesswork involved: For those looking for a more passive investment, the S&P 500 index fund is about as hands-off as you can get. You never need to worry about choosing individual stocks or researching companies. All you need to do is invest as often as you can, then let the fund do the rest of the work. During uncertain times, the safety and stability of the S&P 500 index fund can be reassuring for many investors. While there are never any guarantees in the stock market, this investment has a decades-long history of surviving every recession, bear market, and crash it's ever faced -- and it's very likely to continue that trend in the future. The S&P 500 index fund, specifically, is one of legendary investor Warren Buffett's most recommended investments. "In my view, for most people, the best thing to do is to own the S&P 500 index fund," he emphasized in Berkshire Hathaway's annual shareholders meeting in 2020. Prior to that, in 2008, he even bet $1 million that an S&P 500 index fund could outperform a group of five actively managed hedge funds over 10 years. His investment earned total returns of close to 126% in that time, while the five hedge funds averaged returns of around 36%. Even the highest-earning hedge fund only earned total returns of around 88%, still falling significantly short of the index fund. Despite its relative safety, this investment can be a powerhouse given enough time. The S&P 500 itself has produced a compound annual growth rate of around 10% per year over the past century. This means that while you likely won't earn 10% returns every single year, the annual returns have historically averaged out to around 10% per year over decades. Let's say you invest in an S&P 500 index fund while earning a 10% average annual return. If you were to invest, say, $300 per month, here's approximately how much you could accumulate over time: Number of Years Total Portfolio Value 20 $206,000 25 $354,000 30 $592,000 35 $976,000 40 $1,583,000 Data source: Author's calculations via Now, there is one considerable downside of the S&P 500 to consider before you buy: It can never earn above-average returns. This investment aims to follow the market's performance, so it can't beat the market. That's not necessarily a deal-breaker for many investors, but it could limit your earnings compared to building a custom portfolio of individual stocks. That approach requires more time and effort to do well, but if you're looking to maximize your earnings in the stock market, individual stocks can often outperform the S&P 500. Nobody knows where the market may be headed in the coming months, but an S&P 500 index fund is a Warren Buffett-approved investment that's almost certain to survive even the worst downturns. The sooner you begin investing, the more you can potentially earn over time. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $613,951!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $796,353!* Now, it's worth noting Stock Advisor's total average return is 948% — a market-crushing outperformance compared to 170% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Prediction: This Warren Buffett-Approved Index Fund Will Survive Any Recession or Stock Market Crash was originally published by The Motley Fool
Business Insider
27-04-2025
- Business
- Business Insider
Trade-war panic is so overblown that it's a great time to buy, these Wall Street strategists say
Thanks to the trade war, Americans are feeling downright awful about the economy. The latest University of Michigan consumer survey reported an 8% decline in sentiment from March, as consumers worried about inflation, unemployment, and their financial situation. It's not only consumers — the American Association of Individual Investors recently reported the 12th consecutive week of a negative bull-bear spread, meaning that more investors were bearish than bullish on the stock market. However, a growing cohort of market experts is shunning the doom-and-gloom narrative that the economy is on a collision course with recession. In their opinion, the bad vibes aren't quite aligning with reality. After all, corporate earnings are strong, the labor market is in good shape, and households have robust balance sheets. Their advice? Don't let the negative news discourage you from buying into the stock market at a discount now. Often, overly bearish sentiment can be a contrarian indicator for a market rebound. Here's why these four strategists are keeping a cool head on tariffs and are ultimately optimistic about the market. Alicia Levine, head of investment strategy and equities, BNY Wealth To Levine, extremely low investor sentiment means that it's unlikely for markets to fall much further. "Recession's on everybody's lips, and in some ways, that's a really good thing because, as you know, when the market is expecting something, the news of it itself is less likely to cause a downside whoosh," Levine told BI. "The market has de-risked a lot of the downside scenarios." Ultimately, the stock market crash and negative sentiment are all self-inflicted by Trump, meaning that there's nothing wrong with the underlying economy, Levine said. On the bright side, any change in policy can also greatly reduce the chance of a recession. Trump has shown himself amenable to negotiations, as he floated the idea of scaling back tariffs on China earlier this week. Levine believes that some sort of tariff deal will be struck before the 90-day tariff pause is up. "There's some expectation that this is the peak of the tariffs, and so, as those move lower, that would seem to feed into the sense that there is right tail here," Levine said. Tony DeSpirito, global CIO of fundamental equities and portfolio manager, BlackRock DeSpirito, who oversees several income and value funds including the iShares Large Cap Value Active ETF (BLCV), has never been too concerned about Trump tariffs ruining the economy. Back in March, DeSpirito said on Bloomberg that it was a mistake for banks to be downgrading their stock market outlooks, and he's held steady to that view. "Periods of uncertainty are actually great buying opportunities. Once the uncertainty abates, companies are very adaptive," DeSpirito told BI. Right now, DeSpirito is seeing opportunities in healthcare services, medical devices, aerospace, and defense companies. "In healthcare, I'm finding a lot more opportunity in services than I am in large-cap pharma. Large cap pharma has a lot of issues around where they locate their intellectual property," DeSpirito said. "A number of them have large patent expirations that are upcoming." DeSpirito thinks the market is overly focused on the risk and overlooking opportunities down the road. He's confident that kinks in trade policy will be ironed out soon. "In addition to greater certainty around trade, you'll also get deregulation, which will be a positive for the market and when you think about tariffs as a source of revenue, that revenue source will create more flexibility on the policy side," DeSpirito said. Jonathan Curtis, chief investment officer, Franklin Equity Group Tariff concerns have led many investors to diversify outside the US stock market, but Curtis believes the " sell America" narrative is overblown. Instead of fleeing to international stocks, Curtis believes investors should be doubling down on US leaders like the Magnificent Seven. Especially now that many of the Big Tech names are down roughly 20% from all-time highs, Curtis sees a good opportunity for investors to add to their positions in high-quality companies for cheap. "This productivity gain that we're going to get from artificial intelligence is going to be profound and those companies, many of them Mag 7, hold the keys to that," Curtis said at a Franklin Templeton conference on April 22. Curtis is also bullish on defensive sectors like healthcare, where demand for treatments will remain constant no matter what part of the economic cycle we're in. He sees innovations in GLP-1 medications and AI driving sustained future growth for the healthcare sector. "Those businesses are as good as they were over the long term prior to Inauguration Day, and those companies are incredibly well-positioned for what's about to come," Curtis said of the Magnificent Seven. Jeff Schulze, head of economic and market strategy, ClearBridge Investments It's easy to buy into a doomsday recession narrative, but Schulze doesn't see much evidence to back it up. There's been a lot of talk about how consumer sentiment is at historic lows, but actions are more important than sentiment itself, he said. "In this cycle in particular, it's more important to watch what people do rather than what they say, because when you look at the University of Michigan's consumer sentiment survey, it's been low and declining, yet consumption has been fairly broad-based over the last couple of years," Schulze said at a Franklin Templeton conference on April 22. US consumers might not feel so optimistic, but numbers show they're in great shape. Household debt levels are low, and many homeowners locked in low mortgage rates, insulating them from their biggest monthly expense, according to Schulze. "This is a great opportunity to be dollar-cost averaging into the weakness that we've seen," Schulze said. "A lot of negativity has been priced in a short period of time for US equities, and I don't see any structural excesses in the economy that would cause a deep recession."
Yahoo
26-04-2025
- Business
- Yahoo
Wall Street's Most Popular Investor Sentiment Survey Just Made Dubious History -- and It Has a Nearly 100% Success Rate of Forecasting Future Stock Returns
There are a lot of ways to invest your money, but none have generated a higher annualized return over the last century than stocks. However, this doesn't mean equities aren't without their inevitable ups and downs. Over the last two months, the ageless Dow Jones Industrial Average (DJINDICES: ^DJI), widely followed S&P 500 (SNPINDEX: ^GSPC), and growth-stock-focused Nasdaq Composite (NASDAQINDEX: ^IXIC) have all declined by a double-digit percentage. More specifically, as of the closing bell on April 21, the Dow, S&P 500, and Nasdaq Composite were 15.2%, 16.1%, and 21.3% below their respective all-time highs. This places the Dow and S&P 500 firmly in correction territory, with the Nasdaq falling into a bear market for the first time in three years. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » When Wall Street's major stock indexes tumble, it's perfectly normal for investors to seek out data points and predictive tools that have strongly correlated with directional moves higher or lower in the Dow, S&P 500, and Nasdaq throughout history. Even though these correlations offer no concrete guarantees, some have a perfect or near-perfect track record of forecasting future stock returns. Last week, one such Wall Street indicator made dubious history -- and it's actually great news for patient investors looking to take advantage of the stock market's recent sell-off. Stock market history being made has become somewhat commonplace in recent weeks. The benchmark S&P 500 logged its fifth largest two-day percentage decline since its inception earlier this month. Likewise, the Dow Jones, S&P 500, and Nasdaq Composite recorded their largest single-session point gains in their respective histories on April 9. Amid these wild swings, investor sentiment toward the stock market has been shaken to its core. Since June 1987, the American Association of Individual Investors (AAII) has released the results of a weekly survey that gauges forward-looking market sentiment. Rather than relying on backward-looking historical data, which AAII notes can result in hindsight bias, the AAII Investor Sentiment Survey offers insight into the minds of individual investors to gauge where they see the stock market heading over the coming six months. Over the last 38 years, sustained periods of bearishness -- defined as AAII Bearish Sentiment coming in above 50% -- have been exceptionally rare. As you can see in the post below on X from Bespoke Investment Group, which has aggregated data from the weekly AAII Investor Sentiment Survey, there were only six instances prior to 2025 where bearish sentiment was sustained for at least four consecutive weeks. The record for sustained bearishness among individual investors had been a seven-week period in September-October 1990, which was during the Persian Gulf War. It was eclipsed last week, with AAII Bearish Sentiment surpassing 50% for an eighth-consecutive week. The fuel behind this pessimism is undoubtedly the economic uncertainty caused by President Donald Trump's tariff policy. On April 2, which Trump referred to as America's "Liberation Day," the president unveiled a sweeping 10% global tariff, as well as a slate of higher "reciprocal tariffs" on countries that have historically run trade deficits with the U.S. These higher reciprocal tariffs were subsequently put on a 90-day pause on April 9 for all countries except China. While the president and his administration appear confident that tariffs will lead countries to the bargaining table and put America in a position of strength, there's a lot that could go wrong with Trump's tariff-driven approach. The obvious concern is that tariffs could harm the United States' existing trade relations with its allies and other key trade partners, such as China. It's possible anti-American sentiment in overseas markets can harm demand for U.S. goods, or at the very least spark retaliatory tariffs from other countries, including China. Additionally, the Trump administration doesn't appear to be differentiating between output and input tariffs. Output tariffs are placed on a finished good being imported into the country, while an input tariff is a duty placed on a component used to complete a product in the U.S. Input tariffs run the risk of increasing the prevailing rate of inflation domestically, and might make U.S. goods less price-competitive with those being brought into the country. To make matters worse, the Atlanta Federal Reserve's GDPNow model is forecasting the steepest organic contraction in the U.S. economy, excluding the COVID-19 pandemic years, since the tail-end of the Great Recession in 2009. There are tangible reasons for the AAII Investor Sentiment Survey to be making dubious history. But there's also a huge silver lining... One of Wall Street's odd quirks is that its darkest days tend to offer the best investment opportunities. Not only are some of its best single-day returns clustered near its largest single-day losses, but investment returns following periods of heightened bearishness tend to be well above the historic average. Including the present, there have been seven periods where AAII Bearish Sentiment lasted four or more weeks. Here's how the S&P 500 performed on a total return basis (including dividends) at the one-, three-, and five-year mark, respectively, following each prior instance (where applicable): Week ended Aug. 31, 1990 (4-week stretch): one-year total return (+26.9%), three-year total return (+57.8), five-year total return (+102.1%). Week ended Oct. 26, 1990 (7-week stretch): one year (+30.4%), three years (+67.1%), five years (+119.3%). Week ended Jan. 24, 2008 (4-week stretch): one year (-37%), three years (+2.2%), five years (+23.6%). Week ended July 17, 2008 (4-week stretch): one year (-23.4%), three years (+11.7%), five years (+49.1%). Week ended March 12, 2009 (4-week stretch): one year (+56.5%), three years (+94.4%), five years (+176.8%). Week ended Oct. 20, 2022 (5-week stretch): one year (+17.2%). One year later, the benchmark S&P 500 was higher on a total return basis 67% of the time, yielding an average return of 11.8%. Meanwhile, in the instances where three-year and five-year total returns can be measured, the S&P 500 was higher 100% of the time. The average three-year total return following a period of extended bearishness is 46.6%, while the average five-year total return is a blistering 94.2%. To put these figures into context, the average annual return for the S&P 500 over the long run has been closer to 10%. But following periods of excess individual investor bearishness, the benchmark index has been delivering a compound annual five-year growth rate of more than 14%. While short-term movements in the Dow, S&P 500, and Nasdaq Composite are likely to be volatile and unpredictable as President Trump's tariff policy evolves, historical correlations have accurately forecast higher future returns with a nearly 100% success rate. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $566,035!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $629,519!* Now, it's worth noting Stock Advisor's total average return is 829% — a market-crushing outperformance compared to 155% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 21, 2025 Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Wall Street's Most Popular Investor Sentiment Survey Just Made Dubious History -- and It Has a Nearly 100% Success Rate of Forecasting Future Stock Returns was originally published by The Motley Fool Sign in to access your portfolio
