It’s here. The long discussed volatility is here! Months and years go by, and you patiently listen as we discuss the inevitable rough patches with investing, when market volatility spikes and corrections occur. We talk about market declines because we’re seeking an advance “gut check” from you, in an attempt to gain some insight into how you would feel when markets pull back. The pace of this recent string of down days has certainly grabbed many investors’ attention and sometimes makes one question if they are properly positioned. When markets begin declining, sometimes investors struggle to remember that these days were thought of in advance and planned for and, instead, begin hovering over the “exit” button.
For reference, we’ve inserted this link to a letter we sent to clients on October 21, 2008. On that day, the Dow Jones Industrial Average (DJIA) was down 229 points, closing at 9,034. Today the DJIA was down 530 points to close at 16,460, finishing out is worst weekly pull-back since 2011. The highlighted comments in this letter from 2008 are just as applicable today as they were back then.
In addition, the graph above shows the S&P 500 index and DJIA levels from October 21, 2008 through today. The upward trajectory should demonstrate that investing success favors those who maintain a long-term focus, those who can ride out bumps in the market, and those who are motivated by long-term reward rather than fear of short-term weakness.
We also want to provide access to some of our past blogs as a means of reminding you to maintain a long-term perspective.
Market volatility is unsettling, but the real harm comes from bad behavior by investors (i.e. allowing fear or greed to drive investment decisions). Volatility is a friend to the long-term investor who operates with discipline. We are here for your questions and are happy to talk through the current market environment.
Want to learn more about our disciplined investment approach?