For the first time in close to two years, the stock market is spooking investors. The decline was swift, sudden and unexpected. It caught many people completely off guard. A lot of the headlines I read over the weekend, yesterday and this morning were written to evoke more fear. I’ve pulled together a few good quotes and excerpts to help put recent market events in perspective:
- “Don’t be scared, and don’t be impulsive. Be disciplined no matter what the market environment, and keep saving and investing according to your long-term plan,” Kristin Hooper, chief global strategist at Invesco. Source
- “We are reminding clients to keep this in perspective and look to be proactive not reactive to the markets at this time. It is a big emotional test of…risk tolerance; we all want the upside but remember there is downside risk and goals, risk tolerance and time frames must always lead one’s investment decisions.” Jeff Carbone, Managing Partner of Cornerstone Wealth. Source
- On average, there’s been a market correction every year since 1900… Instead of living in fear of corrections, accept them as regular occurrences. Source
- What’s more, the abnormal smoothness of the stock market over the past couple of years set investors up for a shock whenever stocks did fall at least 5%, as they did on Monday. As I pointed out last month, in the low-volatility market we’ve seen until recently, “even slight declines are apt to set off talk of Armageddon, and you will need to focus harder than ever on long-term returns to keep short-term losses from rattling you.” Source
- The Dow is down -0.4% year to date. Source
- And then some people are selling because they aren’t people at all, but software programs that have been programmed to sell when others are selling. Source
- Losses — as in the Dow falling a little more than 7% over the past two trading sessions (including its biggest point drop ever on Monday) — loom larger than corresponding gains, according to those who study behavioral economics. In other words, losing 7% of your money hurts twice as much [as the pleasure of] making 7%. So, it’s normal, it’s human nature, that you’re in panic mode. But don’t act on your panic. Or at least don’t panic sell. Source
- “If investors were happy with their asset allocation on Thursday, they should find stocks more attractive today. Of course, investors sometimes are asleep at the wheel and a periodic wake-up call can be useful, but prices are just back to where they were a couple weeks ago, so why panic?,” Source
- We’ve had 15 straight months without a monthly loss in U.S. equity markets. Source
- The 665-point decline in the Dow Jones Industrial Average on Friday was the largest since June 2016. However, back in 2016, the Dow declined about 5%, and Friday’s drop was 2.5%. Source
- And while Monday’s drop was the biggest point drop ever, it still pales in comparison to the largest daily percentage losses: On Oct. 19, 1987, the Dow fell 22.61% and on Oct. 28, 1929 the Dow fell 12.82%. By contrast, Monday’s drop was 4.6%. Source
Still looking for some more perspective? Consider reading this article written by CNBC a few years ago.
We are closely watching the situation and will act accordingly as the events continue to unfold.