Around The World In 100 Words

November, 2018; Week 46

Well, it’s official, Markets stink right now. Yep, the hopes for 2018 have been setback by recent market declines. For a while there it looked like the US markets were going to pull off another great year, but the gains of this year have been given back and overall, global equity markets are down 5%. Not a big decline, but with investors used to stocks moving in one direction -up, any market setback seems like it’s time to panic. 

Well, it’s not, time to panic that is. In fact it never is. The attached chart  is the track record of the S&P 500 (the broadest measure of US stocks) over the past 4 decades. It shows annual returns and intra-year declines over this time period. Note that there are only 7 years where US markets have finished lower at year end, but that every year, markets have experienced declines at some point during the year. 

This has to be re-assuring, knowing that every year over the past 4 decades markets go through periods of  negative returns, yet only have finished lower 7 of these. I like those odds! So keeping your cool when markets turn cool is the prudent course of action. The even better course of course is to invest additional dollars and capitalize on opportunities where prices are temporarily low.

Bottom line is that any fluctuations in the short term doesn’t change the big picture in the long term. Markets go up far more times than they go down. So print this Chart and use your tackiest fridge magnets to attach it to the door of your fridge. If you’re tempted to look at your portfolio each day, then be sure to look at this chart as well. It tells the full story that ends well.

 Martin
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