Market stress, 2022 edition

It’s that time again in the cycle of the stock market that I’m hearing more and more fearfulness from people due to the market volatility and the frenzied news coverage of it. I’ve been revisiting some other times when I’ve written commentaries about similar times, like this article from 2018, this one from 2016, and this commentary from 2014, to name a few. However, since the respective dates of those three articles, when things seemed really bad, the average annual total returns of the market (S&P 500) through today (when things also seem really bad) is up 17.6%, 15.8%, and 13.3% respectively. Again, these are the average annual total returns through now since those three dates in late 2018, early 2016, and late 2014.

Investors who have followed their emotions, joining the crowd of other emotional investors, have historically regretted it, as shown below:

Periods that followed investors cashing out of the market have consistently provided above-average returns.

Investing for the long term is not easy; if it was, everyone would do it, and no one would be rewarded. As I said in those linked articles from years ago: stay the course, trust the diversification, and eventually you will be rewarded for having done so.

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