Last week, stocks had their worst performing week in seven months. The Dow Jones Industrial Average dropped 831 points on Wednesday. And the S&P500 has declined nearly 6% from its high of 2940. It was not a good week for equity investors. During times like this, it’s easy to get spooked out of the market. A little perspective can go a long way towards staving off irrational behavior.
Even after the bad week, the market is still in positive territory for the year. As of Friday’s close, the S&P500 has increased 3.5% year to date. It’s also important to remember that we have been enjoying a nine year bull market where stocks have been on a tear. While your investments may be down this week, they are likely higher than they were a year ago and much higher than they were 8-9 years ago.
Are last week’s declines a sell signal? Is the bull market coming to an end? No one knows the answer. What I do know is that “time in the market is better than timing the market.” Stay invested and rest comfortably knowing that, in the long run, stocks always go up. Since 1928, there has never been a 20-year stretch that didn’t produce a positive return.
As Warren Buffet has said…
The stock market is designed to transfer money from the Active to the Patient.