It’s clear you’ve taken a thoughtful, long-term approach when it comes to investing in the S&P 500, and I can see why you’d be cautious about short-term predictions while focusing on compounding returns.
You’re absolutely right about Nvidia being in the sweet spot to benefit from the AI boom. The company’s dominance in GPUs and its pivotal role in powering AI applications has fueled its impressive growth. However, with its valuation soaring, the concern about sustainability and the potential moderation of demand is valid. This is one of those cases where momentum has pushed the stock higher, but the question remains: will it be able to continue that growth at such elevated levels?
As for the S&P 500, the macroeconomic environment is certainly a mixed bag. You mentioned the Schiller P/E ratio, which indeed paints an interesting picture. The S&P 500 being at such elevated valuations, comparable to the dotcom bubble, suggests potential risks, especially if corporate earnings or growth slow down. The concern around tariffs and interest rates also looms large, as inflationary pressures could continue to weigh on the broader market.
That said, you’ve nailed it with the long-term focus. The S&P 500 has proven to be resilient over decades, driven by the broader growth of the US economy, technological innovations, and corporate earnings expansion. So, while short-term volatility is inevitable, your decision to continue investing for the long term, regardless of near-term fluctuations, seems like the best strategy. Drip-feeding your investments ensures you benefit from market cycles, buy at various points, and ride the wave of compounding returns.
I love your stance on professional fund managers too. While many try to beat the market, consistently outperforming the S&P 500 is incredibly challenging. This is why a strategy focused on broad market exposure and patience often beats trying to time the market or pick individual winners.
For anyone in a similar position, staying the course with a diversified, long-term approach is often the smartest move. It sounds like you’re in it for the journey, and that’s the key to building sustainable wealth. How are you diversifying beyond the US market for 2025? Or is the focus mostly on the S&P 500 for now?
