I was watching Bloomberg TV’s Open Exchange with Pimm Fox this morning. One of Pimm’s guests was Sam Stovall, chief investment strategist at Standard & Poor’s. Today’s topic was the risk in the market and whether or not people are scared or should be scared. Here’s what Sam Stovall said:
“Since 1950 we have had 48 pullbacks – meaning declines of 5 – 10%. We’ve had 18 corrections – meaning 10- 20%, and 8 bear markets. At the worst on average we end up getting back to normal in about 3 1/2 years. But people just don’t want to wait that long and they let fear overtake their emotions.”
This is so true and the point of what I have been trying to say all along. No, there’s no guarantee that the market will move back up anytime soon. However, when your goal is decades away, there’s simply no reason to worry about a decline. If anything, consider the volatility a blessing because it is much easier to build wealth over the long run if you are able to purchase assets (stocks) at attractive prices than it is to build wealth when the market is constantly going up.
A Special Note to All You Personal Finance Bloggers Out There: This is where the rubber meets the road. Instead of scaring the bejeebers out of your readers, do a little stock market history reading and offer some hope. Pick up a copy of Jeremy Seigel’s Stocks for the Long Run or The Future for Investors (Affliliate Links) and learn about the market. You’ll be glad you did!