Investing In A Flat Market

You’ve probably noticed that stocks haven’t gone anywhere in a while. The S&P 500 is unchanged over the last 371 days, which has happened just 119 times since 1928, or 0.54% of the time.

Below is a chart showing all these instances where stocks were flat over the previous 371 days.


If you’re frustrated with the lack of movement in stocks, here are a few ideas to juice the returns in your portfolio.

Pick individual stocks

  • There are 96 S&P 500 stocks that are up more than 20% in the last 18 months. But pick well, because there are also 115 that are down more than 20%

But picking individual stocks is hard, so maybe focus on sectors.

  • While the S&P 500 is flat over the last 18 months, there are two sectors with nearly double digit gains; consumer staples and consumer discretionary. But pick well, because two sectors are down nearly twenty percent, energy and transport stocks.

But picking sectors is no walk in the park either, so maybe you should look outside the United States.

  • Although U.S. stocks haven’t made much improvement, European Small-Cap Dividend stocks (DFE) are up 8%, Belgium is up 7% and EAFE Small-Cap  (SCZ) is up 5%. But Vietnam, Brazil, Malaysia and Greece are all down more than 30%, so make sure you focus on the out-performers.

By now you probably realize I’m being facetious. Unfortunately, stocks don’t tell us ahead of time where they are going. We can only know with the benefit of hindsight that stocks are stuck in a trading range.  The reality is, these fractional shares of ownership do not come with a guaranteed rate of return or a maturity date, you are owed nothing.

One of the most frustrating aspects of investing is that it is entirely different from almost every other area in life. If you want to get smarter, read more books. If you want to lose weight, exercise more and eat less. But what’s the formula for becoming a better investor? You can read all the books and trade as much as you want, but that won’t necessarily improve your returns. What you can do is be patient. In a world where quarterly or annual returns can make or break an investor, the ability to think long-term is one of the only areas of investing that can never be arbitraged away.