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Monday, 05 February 2018 20:31

Some Perspective on Recent Market Performance

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A little over 1 year ago, I published a blog post right here where I discussed the Dow reaching 20,000 for the first time ever, and some thoughts on how to handle stock market highs.

Here we are a year later, and the Dow recently closed above 26,000. So, according to my math, a rough 23% decline (a true bear market) would take us all the way back to...2017. Last year. If the Dow dropped 23% tomorrow, it would be about where it was just a year ago.

 

Let's rewind even further. About two years ago from this day, the Dow closed below 16,000. It would take more than a 38% decline to get back to where we were just 2 years ago.

2015 wasn't a great year for the market, and 2016 got off to a rocky start, but many people I know we're still feeling pretty good about where they were at that time, especially after the lows of 2008-2009. If you were feeling good a year or two ago, does that mean the same numbers should make you feel good today? Not necessarily, but I think it does help offer some perspective and set the right frame of mind.

  • "We're going to experience a 23% drop in the market."
  • "We're going to experience some losses that will set you back to where you were one year ago."

Those two statements mean the exact same thing, but I bet they make you feel a lot different. No one can predict when the next extended market decline will be, but it's sure to happen sooner or later. When that time comes, try to keep this perspective in mind. Trust your investment plan and avoid making any rash decisions. And, of course, give us a call if you get worried.

Thanks for reading!

Last modified on Friday, 09 February 2018 20:58