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  • Writer's pictureDerek VanGenderen

The Story is the Same as Ever

Morgan Housel recently released his second book, Same as Ever, a follow-up to his first book, The Psychology of Money. The premise is that to better understand a changing world, you must first understand what isn't changing. Likewise, here are three lessons reinforced from recent years to mark the first record close for the S&P 500 in over two years.

  1. A panic can travel halfway around the world while optimism is still putting its shoes on.

  2. Cynicism and fear have an unusual appeal that positivity can never have.

  3. Markets will challenge and embarrass the largest number of participants possible at any given time.  


For the first half of 2022, the market went into a tailspin. After leaving the stimulus and recovery phase, the economy and market faced their greatest challenges with the Russian invasion, inflation, overstocked inventories, and the Federal Reserve's first interest rate hike. Understandably, the first reaction to unexpected negative news is a sell-off in anticipation of weakening fundamentals. The first half of 2022 was the worst start for the S&P since 1970, being down ~-21%. Modestly defensive companies like Walmart reported earnings that flopped. It wasn’t until September and October when the bottom appeared to have formed. Unemployment reached its pre-pandemic low, despite inflation still running at 8%. Moreover, the S&P 500 ended 2021 with trailing earnings per share of $54.43; by the end of September 2022, it was $57.20, demonstrating the resilience of corporate America. It took nine months for the fear, uncertainty, and doubt to be proven wrong.

Cynicism vs. Optimism

To gain perspectives regarding the second lesson, you can map Google Trends to track and see the relative number of searches for "bear market" or "bull market". From January 2022 to January 2024, the average ratio of searches for "bear market" to "bull market" was 1.8:1. In the June/July of 2022 it was 8.3:1, and in September reached 4.8:1 (which can be viewed as useful potential indications of market bottoms). The only meaningful time that bull searches outnumbered bears was in June/July of 2023, after the market had already risen 27.8%, bulls outnumbered bears 2.3:1. Coincidentally, this was a short-term top for the market, which only resumed its ascent later in the year. Since December 2023, the ratio has effectively been 1:1, although the S&P has now returned 35.8% since September 2022. The whole world will tell you when it's a bear market, but many often come late to the realization a recovery is already underway.

Expect the Unexpected

Ultimately, 2022 and the steep market decline caught most market strategists off guard. After the embarrassing year, many of them vowed not to get blindsided again. So, for the first time this millennium, they collectively called for the market to be down ~2% in 2023. The consensus is rarely so pessimistic. Coincidentally, starting in December 2022 until today, the money markets continued to set new record asset levels. “T-Bill and Chill” became the mantra of investors everywhere, as an alternative to stocks. Following Newton's third law, which provides for an equal and opposite reaction, the S&P 500 rose 26.25% in 2023 and set its new all-time high last week. Again, leaving many strategists and market participants behind the eight ball for performance.  

On average, a 20% decline in the market occurs every 2.7 years and returns above 20% occur one-fifth of the time. As an investor, in general you must be able to tolerate volatility, pain and uncertainty to earn an equity-like return. The specific event that causes panic may differ each time, but nothing that has happened in the past two years should be considered extraordinary in the fullness of time. It’s the same as ever.


Derek VanGenderen, CFA 

Portfolio Manager 

Cumberland Investment Counsel Inc.


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