Why Should I Invest In The Stock Market Now? by Franklin Templeton Investments
Where Is the Stock Market Headed?
Recent volatility has some investors contemplating if they should pull out of the market or sit on the sidelines and wait for the best time to invest. If you’re not convinced that now is a good time to be invested, consider some of the reasons that kept our fictional investors from investing in years past.
Using the S&P 500 Index to represent the general stock market, we see that, regardless of what often seems like bad timing, stocks have historically provided investors with growth over time, despite short-term ups and downs. And often the best buying opportunities were when things still seemed quite bleak.
It's no secret that ESG (environmental, social, governance) factors have become more important in investing. Fund managers are increasingly incorporating ESG factors into their portfolio allocations. However, those that don't are in danger of being left behind as investors increasingly avoid allocating with funds that don't incorporate ESG into their allocations. Q3 2021 hedge fund Read More
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Recessions Often Lead to Opportunities
The stock market in general is forward-looking—it moves in anticipation of expected events. For example, if the Federal Reserve was expected to raise interest rates, the market typically would have priced this in even before the rate hike actually happened. Likewise, past market recoveries have typically started before a recession was officially over. Thus, if you keep waiting to start investing, you may miss an attractive investment opportunity.
The charts below show the S&P 500 Index’s movements shortly before, during and right after each of the seven U.S. recessions over the past 50 years through 2014. During this period, recessions lasted an average of 13 months, and stocks hit bottom an average of 4 months before the recession ended.11 Past performance cannot guarantee future results.
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