Dear Friends,
With the S&P 500 Index in correction territory (down more than 10% from the previous peak) investor anxiety levels are understandably elevated. The market faces a number of threats, including inflation, a hawkish Federal Reserve, soaring yields, and war in Eastern Europe. During volatile markets, it’s difficult to focus on anything beyond the short term, but at times like this, studying market history for reminders of the benefits of long-term investing can be helpful for investors.
First, simply put, stocks have gone up over time as shown in the chart below. Based on this 122-year data series of the Dow Jones Industrials, stocks have gained 9.5% annualized, including dividends. That’s a pretty good long-term track record.