The Market is Nervous? Are You?
Okay, so 2014 stock market has gotten off to a shaky start. There have been several down cycles – one after another. Memories of the market melt-down of 2008 are surfacing. It’s funny how the painful memories are so much stronger than the pleasant memories.
But let’s recall a few of those memories – painful and pleasant. The downward slide was scary – not knowing where the bottom was. It took nerves of steel to stay the course.
As a financial advisor, I told my clients, you can get out of the market if you want. You can sit on the side lines in cash – just let me know when you are ready to get back in. And remember this, market recovery comes in spurts. It isn’t a straight ride up. It is jerky and erratic. But you have to be in the market to benefit when it is on the upswing.
You can follow the indexes like the Dow Jones or the S & P 500 over several decades. You will see that each decade had at least one major decline of 15% or more. While the markets fluctuated after the declines, the declines were often followed by meaningful recoveries. (There is no guarantee this will be repeated.)
The blog is limited in displaying the history of the indexes here. However you may receive a complete chart showing the history of the S & P 500 Composite from 1930 to the present by emailing our office at [email protected] . *
So all this statistics is head knowledge. It can calm your nerves to an extent. Experiencing a few of the market swings helps carry you the distance.
I found my clients with more investment experience were calmer than ones who had only experienced the thriving 1990’s and limited recession of 2001-2003. Ones who survived the depression or the recession of the 1980’s had nerves of steel. The same response was coming from the money professionals. A young money manager said she was glad for the dinosaurs in their company who calmed the waters with their vast experience. “This too shall pass.”
Check in next week to learn how to take advantage of market downturns.
*”Past performance is not indicative of future results. It is not possible to invest directly in an index. Some mutual fund companies may provide exposure based upon a given index; in which case you should obtain a Prospectus from the Fund Sponsor before investing.”