Current Events Investment Decisions Uncategorized

All-Time Highs & The Lows That Sometimes Follow

“Every past decline looks like an opportunity; every future decline looks like a risk.”

-Morgan Housel

As we close the book on 2021, another year of generally excellent investment returns, we revisit the recurring anxiety of “what if this is the peak?”

It’s certainly not an uncommon feeling. Many investors may think a market high is a signal that stocks are overvalued or have reached a ceiling. However, they may be surprised to find that the average returns one, three, and five years after a new month-end market high are similar to the average returns over any one-, three-, or five-year period:


Performance after a New Stock Market All-time high

Source: Dimensional Fund Advisors, S&P 500 Index Returns 1916-2021.

Reaching a new high doesn’t mean the market is destined to retreat. Stocks are priced to deliver a positive expected return for investors, so reaching record highs regularly is the outcome one would expect. New highs are necessary for long-term investors to make money in the markets.

As such, it’s a good thing that markets have been constantly achieving new highs. Here’s the number of new all-time highs that were hit per year over the past decade:

Year # of New Closing Record Highs
2012 0
2013 45
2014 53
2015 10
2016 18
2017 62
2018 19
2019 36
2020 33
2021 70

Source: Morningstar S&P 500, 1/1/2012 – 12/31/2021.

As I’m sure you’re aware, January has been anything but kind to investors, so far – seemingly refuting the evidence laid out above. But, we know when investing in financial markets that drawdowns are a possibility. Much like the regularity of new market highs above, we see regularity with market drawdowns, as well.A new all-time high isn’t a unique occurrence or uncharted territory – it’s kind of the norm.

Going back to 1950, we have seen a drawdown of at least 5% in nearly every year. Even declines of greater than 10% have been observed in most calendar years.

Magnitude of Decline Frequency
5% or more 96% of years
10% or more 62% of years
20% or more 25% of years
30% or more 10% of years
40% or more 4% of years

Source: Morningstar S&P 500, 1/3/1950 – 12/31/2021

There’s a lot weighing on markets: Will inflation continue? Will the Federal Reserve tighten monetary policy, raising interest rates? Will new tax legislation ever happen? What about COVID? Climate change? China? Tensions around Russia and Ukraine? Cryptocurrencies? Meme stocks? SPACs?

I get it – It’s a lot. But, it’s always a lot. Remembering the Morgan Housel quote at the top: “Every past decline looks like an opportunity; every future decline looks like a risk.”

Less than two years ago, we were in the early days of the COVID-19 Pandemic. People were afraid to leave their house. We left packages by the front door for several days to “disinfect”. We stood around in socially-distanced circles with neighbors for “happy hour” on Friday evenings (I kind of miss that part of it, actually). Anyway, the S&P 500 fell 34% in the span of a month. Since then, the index had gained 114% to the most recent high that was hit on January 3rd1. Unintuitively, it turned out to be a marvelous investment opportunity, but it certainly didn’t feel that way in the moment.

The markets today may seem scary. The truth is the magnitude of a correction, when it will occur, and how long it will last is unknown. Have we already taken the first steps toward a depression? Or will we be achieving new highs again in February or March? I can’t say. I’m pretty confident that however things play out, we will look back on this period with the same attitude of “well, that ended up being a good investment opportunity.”

We allocate the investment portfolios we build based on the capacity each individual client has to bear risk. Those portfolios are built with the expectation of declines. The financial plans are built with the expectation of declines. The retirements we forecast are not an elaborate house of cards that fold as soon as the wind changes direction. If the anxiety and worry become too much to handle, then let’s explore what it really means for you.

1 Source: Morningstar. Data from 2/19/2020 to 12/31/2021.


What We Do and How We Help

By Derek Johnson, CRPC® and Jon Powell, CFP®

Retirement is arguably one of life’s most significant milestones. But, with so many questions about health, life circumstances, and even the economy, how do you plan for retirement in a way that leaves you feeling confident? In other words, how can you dream big and plan accordingly so all your bases are covered? 

These are legitimate concerns and the reason that Ferguson Johnson Wealth Management exists. We offer personalized financial planning and wealth management advice that is built on relationships. By building a relationship with you, we can help you navigate your life journey.

What We Do

Ferguson Johnson Wealth Management is a fee-only, independent financial advisory firm that partners with you to help set you up for the retirement you’ve been dreaming of. Our personalized and client-centered services allow you to plan wisely so you can live fully. 

We make this a reality by building a foundational understanding of your life—your dreams, concerns, and challenges. We leave no stone unturned as we look at your current situation and assess how we can help you get from point A to point B. All of our services—from retirement planning and investment management to charitable giving and tax strategies—are customized to your specific goals and values. That means, your portfolio won’t look like anyone else’s because not only is your timeline and risk tolerance unique, but so is your vision of an ideal retirement. And, as a fiduciary firm, we can use the best suited funds and products available and tailor them to your needs. 

We also follow a long-term, steady approach. Life is unpredictable—and so are the markets. We’ll build your portfolio with a big-picture view that will not only protect it from major swings but also keep it academically researched and robust. Our comprehensive, personalized touch will help you find the confidence to live your best life right now and look to the future with excitement.

Who We Serve

In order to provide the highest quality services and support, we specialize in serving pre-retirees, retirees, and government employees. We can help you prepare for retirement and design a plan that helps your money last as long as you need it to—no matter what life throws at you. 

Are you a government employee? Our 40 years of experience in the Washington, D.C., area has uniquely positioned us to understand federal retirement benefits and we are equipped to educate you on your options and optimize your benefits to secure your future. 

Regardless of their backgrounds or professions, our clients have a few things in common: They’ve worked hard their entire lives and are looking for guidance and assurance as they reach the end of their working years. They want to continue to steward their money wisely and know that they’ve done everything they can to plan for retirement. 

The Ferguson Johnson Difference

We know there are plenty of advisors out there. What sets us apart are the long-term relationships we build with our clients and the objective perspective we bring to the table. Our clients know they can rely on us to listen, care, be available, and give them the knowledge they need to feel prepared. We pride ourselves on our proactive, authentic approach and the invaluable order we bring to peoples’ financial lives. 

We Are Here for You

You can’t put a price on confidence. If you have questions or concerns about your money, whether you’re on track to reach your goals or something is causing you financial worry, reach out to us at 301-670-0994 or by email at We can’t wait to hear from you. 

About Derek

Derek Johnson is an investment advisor representative and is the principal and director at Ferguson Johnson Wealth Management, an independent, fee-only fiduciary firm that has been helping clients plan for and enjoy retirement for more than 40 years. Derek also serves as head of the investment committee; in this capacity, he is in regular contact with leading academics in the areas of portfolio and wealth management and has presented research on the benefits of asset class allocation to the American Association of Individual Investors (AAII). He holds the Chartered Retirement Planning Counselor™ (CRPC®) professional designation.

Derek is known for providing honest advice and excellent service to his pre-retiree and retiree clients and feels privileged to be a trusted resource and support his clients can rely on. Derek has more than 20 years of experience and earned a bachelor’s degree in finance from the University of Maryland. Outside of work, Derek enjoys spending time with his wife, Tiffany, and their two daughters, Sloane and Adalynn. He also loves football and traveling. To learn more about Derek, connect with him on LinkedIn.

About Jon

Jon Powell is a financial planner and portfolio manager at Ferguson Johnson Wealth Management, an independent, fee-only fiduciary firm that has been helping clients plan for and enjoy retirement for more than 40 years. With more than 10 years of experience, Jon is passionate about providing unbiased advice that puts his clients first. He considers it a privilege to carry some of the financial burden for his clients and educate them so they can make empowered decisions for their futures. Jon is also the primary author and curator of the Ferguson Johnson Wealth Management blog. 

Jon graduated from Virginia Polytechnic Institute and State University with a bachelor’s degree in financial planning and holds the CERTIFIED FINANCIAL PLANNER™ (CFP®) professional designation. When he’s not serving his clients, you can find Jon spending time with his wife, Erica, and their pets– a black lab named Nugget and an orange tabby cat named Kiwi. He loves to play tennis and golf and won’t turn down a good board game. Jon is a diehard fan of D.C.-area sports teams; you might see him at a Washington Nationals game. To learn more about Jon, connect with him on LinkedIn.


Can I Retire in the Middle of a Pandemic?

For families contemplating retirement, the prospect of moving on to a new stage of life may feel even more uncertain than ever in light of the pressures and uncertainties brought on by the coronavirus. As advisors, we’ve come across two very common questions over the last few months from soon-to-be retirees:


We’re In a Bear Market Due to COVID-19, Now What?

It’s honestly pretty weird to have a market crash that has such a simple explanation. An uncontained viral outbreak is endangering public health and disrupting economic activity. That’s the whole breakdown. It’s one sentence. It would take me 5,000 words to explain the financial crisis from last decade and, even then, you’d have a list of follow-up questions. The ability to succinctly and confidently answer the question “why did markets go down?” is bizarre.

Speaking strictly financially here: I’ve heard a lot of suggestion that this time it’s different. Here’s the real inside information: It’s always different. Here are several This Time It’s Diffferent™ events that have led to bear markets in domestic equities in the past: Unfettered lending, terrorism, the birth of the internet, an oil crisis, a single day in 1987, war, an extended period of high inflation. In each case, markets flailed with uncertainty as participants grappled with how to handle events that generated a high degree of uncertainty and worry. What ended up not being different is that markets recovered from each of these This Time It’s Different™ events.


Coronavirus in Perspective

I wanted to follow up on our post from last week that aimed to put the market impact of Coronavirus in perspective. In that post, I talked about how markets and investors have reacted to different recent health crises in the past. Since then, I’ve come across a few resources that I think help put all the chaos from the last two weeks into perspective.

Investment Decisions Uncategorized

The Coronavirus & Your Investments

You may have already heard, but Coronavirus is sweeping the globe. As of Monday, according to the World Health Organization, there have been just under 80,000 confirmed cases of COVID-19 (approximately 77,000 of which are in China) and around 2,500 deaths attributed to the virus.

Airlines are canceling flights, the US is issuing travel advisories, and there’s even talk of calling off the Summer Olympics, set to take place in Japan in a few months. It is certainly a scary time to have access to up-to-the-minute news.


Your New Decade To Do List

A New Year (a new decade) is an opportunity to get things in order and make improvements. Every article published this week and last is a list of things to do to start the new year off right. Personally, I’ve already read more than I can count, so, I’ll keep this brief. Two financial and two non-financial to-do’s for the new year:

Review What the SECURE Act Means for You

The ‘Setting Every Community Up for Retirement Enhancement (SECURE)’ Act was signed into law in December as a part of the latest government spending bill. As a whole, the SECURE Act is a grab bag of various incentives and obligations for individuals and companies providing retirement plans. The overall intent is to make it easier for families to save for retirement with several changes affecting the availability of and incentives for saving in retirement accounts.


The Problem with Running to Cash When Times Get Tough

Albert Einstein was said to have described compound interest as “the eighth wonder of the world” and that it is “the most powerful force in the universe”. High praise from one of history’s greatest scientists about an elementary-level concept of finance. I mean, he’s right. Warren Buffet, widely regarded as one of the greatest investors ever, openly admits that most of his wealth is attributable to simple compounding.


Non-Financial Advice to Help Achieve Financial Success

We believe that financial success will lead us to happiness. There’s the adage: “money can’t buy happiness” and broadly speaking, I agree with that. But, there’s no ignoring that financial stress is cited as the leading cause of divorce. Tragically, financial loss or instability has led people and families down destructive paths. While money may not buy happiness, financial stability and comfort is a crucial ingredient for most in finding that happiness. That’s why you’re here reading this article. That’s why I’m here writing it – and crucially – why I am a financial advisor.


Things to Think About Before Deciding to Payoff a Mortgage Early

Many view debt-free homeownership as an important step on the journey to financial freedom and, eventually, a successful retirement. As housing costs increase across the country, particularly in and around major cities, being able to live in your home while only paying tax and insurance can go a long way toward keeping monthly expenses manageable.