Bank failures, recession fears, inflation, political drama, housing market collapse. The headlines continue to fit the “Armageddon” narrative.  Investors are extremely pessimistic, as evidenced by the AAII Investor Sentiment Survey, a weekly survey that measures investor confidence.

Translation- the herd is far more nervous than normal, which isn’t surprising considering the environment.

The good news: the AAII survey is contrarian; above-average market returns have often followed low levels of optimism (like today).

So, How’s The Market?

Strong, which may come as a surprise to many investors.  The S&P 500 posted a gain of 7% for the quarter, EVEN after witnessing the largest bank collapse in 15 years.  You might ask, “Is 7% good?”   Well, for context, the market’s average yearly return over the past 25 years has been 7.38%.  The last 90 days have spit out an average years’ worth of gains.   Even bonds participated, posting a 3.23% gain for the quarter.  Again, for context, bonds have averaged 3.93% per year over the past 25 years.

Source: www.Kwanti.com  

Two In a Row…

What’s even more impressive is the market strength exhibited over the past 6 months.  Q4 of 2022 posted similar results as this quarter.  Two consecutive quarters of growth!  Check out these numbers:

Source: www.Kwanti.com  

Literally, no one is talking about this! The last 6 months have been great, even in the face of ugly headlines. That’s how market rebounds form.  Unannounced, for no specific reason.  This is why it's critical to stay invested all the time!

Statistically Optimistic

A strong Q1 is a BULLISH indicator for the remainder of the year.  This marks the 17th time that stocks have grown by 7% or more during the first quarter.  The previous 16 instances posted positive annual returns 100% of the time, with an average return of 23.1%.  

Thanks for reading, let's hope for continued strength as we head towards spring!

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