Intra-year declines may feel like doom, but over a calendar year stock markets have delivered positive returns.2022 have not been friendly to investors thus far. Volatility has got investors on edge, and a market that only seems to get weaker gives many a reason to sell. If anything, selling when markets are volatile or down is a bad idea. Looking at a broad US stock market index, US stocks have ended the year positive 85% of the time. Even in 2020, the pandemic-induced crash saw stocks with gains of 21% by year-end.
The Bottom Line
Volatility is normal. In fact, they should be expected. Rather than fretting over them, they can be good opportunities to accumulate units at a lower price, knowing that markets tend to deliver positive calendar year returns.
So, when markets are down consider buying the dip.
Disclaimer: Dimensional. Data is calculated off daily return from January 2002 – December 2021. US Market is represented by the Russell 3000 Index.
Down Is Good
What this Chart Shows
Intra-year declines may feel like doom, but over a calendar year stock markets have delivered positive returns.2022 have not been friendly to investors thus far. Volatility has got investors on edge, and a market that only seems to get weaker gives many a reason to sell. If anything, selling when markets are volatile or down is a bad idea. Looking at a broad US stock market index, US stocks have ended the year positive 85% of the time. Even in 2020, the pandemic-induced crash saw stocks with gains of 21% by year-end.
The Bottom Line
Volatility is normal. In fact, they should be expected. Rather than fretting over them, they can be good opportunities to accumulate units at a lower price, knowing that markets tend to deliver positive calendar year returns.
So, when markets are down consider buying the dip.
Disclaimer: Dimensional. Data is calculated off daily return from January 2002 – December 2021. US Market is represented by the Russell 3000 Index.