Investing in stocks has never been for the faint of heart, but lately the road has been especially rocky. The recent downhill ride has left many investors wondering whether they should swear off equities altogether.
However, investors who react emotionally to current events could find themselves missing out on potential long-term opportunities. Consider the historical record. In the past, the markets have usually rewarded those who invested for the long term. Using a buy-and-hold strategy is one way to help manage risk and possibly overcome the effects of short-term volatility.
In the 50 one-year holding periods since 1958, the S&P 500 Composite (total return) experienced 12 periods with negative returns. However, over the 41 10-year holding periods since 1958, only one 10-year period showed a negative return.
Of course, this doesn’t mean you should never sell your holdings at any given point. Always consider your risk tolerance, time horizon, and overall financial goals when buying or selling investments.
The stock market has had its share of roller-coaster thrills lately, but don’t be tempted to react emotionally. Call today to review the long-term implications of your investment strategy.