What are the worst years to start investing in the recent 50 years?
The recent week has been quite a tiny disaster in the market. Dow Jones has its worst week since June while S&P 500 posted a weekly loss of 4.55%. This means that S&P 500 is now almost back to the same level as it is at the very beginning of the year.
Given the big drop of S&P 500 in 2022, some are expecting that 2023 will be a year of positive gains as it's usually rare to see two consecutive years of negative returns for S&P 500 in recent years.
However, I'm sure that consecutive years of drop do happen more often than we thought.
Hence, I have a question in my mind. What are the worst years to start investing in the recent 50 years?
To answer this question, we will probably need to start putting some parameters to it.
How do we define the worst years to start investing in? I define it as the year where you start investing and have the worst 3-year, 5-year, and 10-year gains. So if you start investing at the start of 2000, we will look at the data of the total returns at the end of 2022 (for the 3-year return), and also the total returns at the end of 2024 (for the 5-year return) and lastly the total returns at the end of 2009 (for the 10-year return).
For simplicity sake, we will also just look at the S&P 500.
Putting a parameter of recent 50 years sounds like a big load of data to crunch hence I thought of a good idea.
How about asking ChatGPT?
It's all the rage now. It can write essays, provide codes, and even give life advice. Surely, it can help me with such a task to find the worst years to start investing in the recent 50 years.
And so I did.
First, I ask for the top 10 worst 3-year returns of the S&P 500 since 1970 and request the results to be displayed in a table.
Voila! Isn't it impressive? I just ask ChatGPT the question and I get the results without the need to do any data crunching!
I then continue to ask for the top 10 worst 5-year return and 10-year return of the S&P 500 since 1970.
Isn't that just amazing! All the results that you requested all nicely displayed in a table for you!
And then it's time for the golden question. What are the worst years to start investing in the recent 50 years?
And here's the answer to the question! The worst years to start investing in are 2000, 1973 and 2007. If you were to start investing in those years, you get dismal results no matter if it's a 3-year, 5-year or 10-year period.
BUT wait a minute!
Before you start to think that this ChatGPT is going to take over all the analysts' jobs, take a look at the figures in the table.
I'm rather sure that the figures might not be the most accurate.
I ran another chart on YCharts and this is what I found.
There is no way that the 5-year return of the S&P 500 will be -41.4% (as shown by the answer from ChatGPT) if you start investing in 2000. It's too far off the chart as seen above.
Hence, before you start to rely on ChatGPT on every single thing, please take note that the data presented can be flawed at times- just like the example above.
Having said all of these, it's still true that 2000 and 2007 might be still the worst years to start investing on the above chart/data. 1973 (as highlighted by ChatGPT) might also be in the top 3 worst years to start investing in but this is not something that could be validated due to the limitations of the data range in YChart.
So I hope you got your answer, and remember not to trust ChatGPT with everything!
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