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Patience is a virtue and a flawless long-term indicator

The average trader and investor tend to be impulsive, often overreacting to news flows and short-term economic and corporate earnings releases. Chances are that investors focus too much on the declines in the stock market and investment portfolios.

It is almost impossible to know when a stock market bear decline will begin or end, how long it will last, or where the exact bottom will be. However, history reminds us that the stock market will eventually recover, recouping the losses and trending to new all-time highs.

The stock market (SPX) spends a disproportionate time in an expansion or uptrend. Looking at the very long-term SPX chart shows the bear market declines tend to bottom out, resulting in the resumption of the longer-term uptrend.

Having the patience to weather through these declines can lead to a positive total return. Purchasing SPX at any point over the past century has led to profitable gains as long as you held on to your long positions for 20 years or more.

Although some classic economic indicators are signaling an imminent recession this year or next, and the stock market to decline further or at the very least experience volatile swings into the second half of the year and 2024, it is foolish to underestimate the power of the long-term upward bias built into the stock market.

Time invested in the stock market has consistently outperformed almost every investment strategy, at least from a longer-term perspective.

Long-term investors with time horizons of 20 years or more patience is a virtue and a remarkable flawless indicator.

With only a few exceptions (i.e., 1929-1932, 1973-1974, 2000-2002, and 2007-2009), the longer-term structural SPX trend remains in a solid uptrend. The multiple uptrends all point to trends favoring higher SPX prices over the long term.

Any bear market declines in the SPX Index were temporary as the long-term uptrend prevailed. While it is difficult to know exactly when the bear market declines will occur and how long they will sustain or where the ultimate bottom will be, history has shown SPX and other stock market indexes tend to trend higher over the long term.

The monthly chart of the SPX Index dating back to the 1920s shows multiple uptrend channels. The middle of the uptrend channels, currently rising to 2,798 (orange dash line), offers immediate support.

The two bottom channels at 1,815 and 1,284 (burgundy and red lines) provide long-term support. The uptrend channels at 5,280, 5,593, and 8,258 (gold, green, and blue dash lines) provide pivotal resistances.

In summary, time in the market is the key to consistent stock market outperformance. For long-term investors, history has shown that being patient is often the best investment strategy for generating excellent returns.

Although other economic indicators signal trouble for the economy and the stock market, patience is the only flawless indicator to generate consistent long-term outperformance for investors.

Source: Chart courtesy of

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