Welcome to 2016!
Unfortunately, no one reminded the stock market that we wanted to celebrate the New Year. It was the poorest four-day beginning to a new year for the DOW in modern history.
Geopolitical events fueled the sell off including fears about China’s economy slowing as well as Saudi Arabia severing diplomatic ties with Iran and the effect on oil production.
What to do? Sell your stocks? That’s not the answer! At times like these, remember why you invested in the stock market and how it fit into your long term plans. June 2015 CNN Money wrote,” In nearly 90 years of market history, if you bought stocks on the absolute worst day, the average time to make your money back was 3 years.”
With a longer term investment strategy, that is not a very long time and should not make you shy about investing in stocks. CNN added, “Take the 2008 financial crisis. If, you got in at the peak, it would have taken 5.5 years to recoup your money.” Most people that got out of the stock market in 2008 have yet to recoup their money while those that rode out the storm and stayed the course have actually seen positive returns.
As I wrote in our August, 2015 Newsletter, “Remember the key to successful investing is adhering to an asset allocation strategy. It’s time not timing that matters most.”