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Drops in the stock markets are scary for most investors.  Stock market declines are so scary that investors typically sell after their stocks have gone DOWN, and wait to buy stocks back when the stocks have gone UP (often after the stocks have gone up by a significant amount).  In other words investors sell low and buy high.  This is because people make investing decisions based on emotions, not as part of a well designed financial plan and strategy.

Successful investors manage their emotions and behavior because they are students of financial market history.  This Marketwatch article by Victor Reklaitis shows that the S&P 500 index bull market returns have far exceeded bear market losses.  The bull markets have also tended to last much longer than the bear markets.  The chart in the article shows S&P 500 gains and losses since the 1930s.  

I encourage every investor to look at this chart and let the powerful lesson sink in: The S&P 500 (and even more so, the broader global market) has rewarded investors who develop a well-thought out investment plan and STICK with the plan for the long haul.  

One last suggestion, print this chart out and post it in a place where you’ll look at it every day.  It may just give you the courage to “stay the course” when the inevitable market storms hit.

Read Marketwatch Article

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