Investors who have owned high-flying tech companies, stay-at-home plays and Reddit “meme” stocks have made a killing in the market in the past year. But you didn’t have to be a stock-picking genius to generate some historically good returns since March 23, 2020.
Even investors who took a conservative, diversified approach to the market and timed the 2020 pandemic bottom last March have made a tremendous return on their investment at this point.
In 2019, the SPDR S&P 500 ETF Trust SPY generated an extremely strong 31.2% total return. In fact, the index fund had an extremely impressive decade in the 2010s, producing an overall 10-year total return of 252.8%.
Pandemic Sell-Off: The SPY fund started 2020 on a high note as well, rising from around $323 to start the year to a pre-pandemic high of $339.08 in mid-February. Unfortunately, over the next several weeks the bottom completely fell out of the market thanks to the COVID-19 pandemic.
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The SPY ETF plummeted as low as $218.26 on March 23, 2020, officially ending the more than decade-long bull market following the 2008-2009 financial. At the time, investors had no idea March 23 would mark the end of the shortest bear market in U.S. history at just 33 days in duration.
By May 26, the SPY was back above $300. By Aug. 18, the index was back at new all-time highs but the rally certainly didn’t stop there. The combination of Federal Reserve interest rate cuts, unprecedented government stimulus measures, a virus mortality rate that was much better than initially feared and a handful of extremely effective vaccines sent stock prices skyrocketing well above pre-pandemic levels.
Charging Into 2021: Two brief tech stock sell-offs in September and October of 2020 were mere bumps in the road in the march to all-time highs of $398.12 earlier this month.
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On the one-year anniversary of the 2020 pandemic market bottom, investors who bought the dip and held on have generated some nice returns. In fact, $1,000 in the SPY ETF bought on March 23, 2020, would be worth about $1,744 today, assuming reinvested dividends.
Looking ahead to 2021, the SPY may still have room to run. Analysts are calling for S&P 500 companies to grow EPS by 24.9% this year, according to FactSet.
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