Well needless to say, it has been an ugly start to the year. Thursday May 5^th was the 54^th worst day in the U.S. stock market since 1995. There have been other ugly days, Sept. 17, 2001, the day the market opened after the 9/11 terror attacks. Sept. 15, 2008, the day after the Lehman Brothers collapse, and March 16, 2020, the day Covid-19 shut down the global economy.

All these dates bring back painful memories for investors. However, how you respond to these agonizing days in the market determines your success as an investor. Do you tend to break from your long-term investment plan, or do you stick to the principles of sound investing?

Courage and consistency always win in the long run. The chart below shows how investors fared after pulling $1000 out of the U.S. market after each of the worst 54 days since 1995, vs adding money to the market after each of those painful days. The results are clear, investors were better off adding money to the market after those down days. Obviously, the more money added, the better.

S&P 500 Index growth of $100,000

Source: Bloomberg, L.P.,May5,2022. As represented by the S&P 500 Index. The S&P 500 Index is a market-capitalization-weighted Index of the 500 largest domensit U.S. stocks. Indicies cannot be purchased by investors. Past performance does not guarantee future results. This is a hypothetical example shown for illustrative purposes only and does not predict or depict the performance of any investment. All figures in U.S. dollars.

Some of you may be wondering if this time is different, will this be the time the markets don’t recover. After all, inflation is still at record highs, interest rates are rising, China continues its lockdowns and the war in Russia/Ukraine rages on. All of this may be true, and we may still see some more down days ahead; but do you remember how you were feeling on April 14, 2000, during the early days of the tech wreck, or Nov. 5, 2008, during the height of the Global Financial Crisis?  My point is, although there may still be economic and geopolitical challenges to be worked through, long-term investors are ultimately better served by staying invested, or adding more money when it takes the most courage.

Have a great long weekend,

Bring on summer!

Tracey

Source: Original article by Brian Levitt, Global market Strategist, Invesco Canada, posted on Invesco Canada official blog. Reposted on Advisroanalyst.com 16-05-22

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