You are not alone. No one likes to lose money.
No one likes a drop in the stock market.
No one likes the media hype of panic and losses.
No one likes volatility and uncertainty.
Investors are many times more sensitive to losses than to gains. It is a fact.
- A 10% loss hurts; a 10% gain barely gets noticed.
You are not the only investor who may be suffering from pain and anxiety.
Take a deep breath. And then another. And then do it again.
Try to relax. Everything will be just fine. But easier said than done!
The best remedy is to be well informed and to act rationally.
Stated simply, stocks go up and down. But they go up more than they go down.
Investors get rewarded for the risk and uncertainty of owning stocks by earning higher returns over time.
Even when stocks go down, dividend income is generally secure and grows over time.
Market recoveries after downturns are much faster than most investors realize.
- Most losses of 10% to 20% are recovered within six months.
- The 50% loss from November 2007 to February 2009 was recovered in 37 months (three years+).
- Bonds cushion the volatility of stocks. Few investors have a 100% stock portfolio.
Losses are only “on paper” until investments are sold. Nothing sold, nothing lost.
Measure your historic return over a minimum of a five-year time period.
- If you measure your portfolio from the last peak, you will always be disappointed.
Invest for future, expected gains, not past returns. Think five years+ into the future.
As always, please contact us with any questions, news or comments.
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