I get asked a lot what I think the stock market will do in the next couple of months. I basically will say I have no idea, but based on certain variables, the trend will be up over a time period of 10+ years. Here are some things that I look at that give me hope for the future.
First, labor force participation, employees being auto enrolled into 401Ks, and population growth will continue to go up. The amount of employees putting automatic contributions into 401K plans is huge along with company matches (contributions). Keep in mind that a large portion of these contributions gets invested in index funds, which then get invested in stocks. Employees get raises, and those contributions go up. Contribution limits go up, and more contributions/ matches get invested in the capital markets. America is still a place that can choose its immigrant population if we need to add people to the labor force. There is pretty much an unlimited supply of labor that wants to come here because despite our problems we are still the land of opportunity.
Second, technology moves forward not backwards. I had my son tell me that technology and innovation used to double every 90 years. Now it doubles every 7 years. Who knows what kind of innovation we will see between now and the end of this decade.
Third, a recession or probable recession will be dulled by these factors along with the fact that we have 5 life changing technologies happening right now. As a comparison, in the 90’s we had two (the move to mobile phones and high speed internet which turned to high speed WiFi in early 2000s).
Lastly, systematically invest over time to even out any large drops. You buy high, you buy low, but over time you build life-changing and sustainable wealth.