The other day the S&P 500 dropped 2.57%. CNN’s home page has the headline, “The Dow logs biggest loss since October”. And to quote some lady on Facebook, “I am freaking out about the stock market, anyone else?”
First, let’s put things in perspective. The S&P 500 closed today above where it was on January 6th, a grand total of 21 days earlier. In fact, never in history has the the share price of the S&P 500 been this high, other than during this current month.
Second, this isn’t even a crash, LAST March a share of the S&P 500 dropped from $3,380 to $2,304, a drop of 32%. That was a proper crash. But guess what happened after that. It went back up. And today it dropped to $3,750, way ABOVE the high point before COVID.
What’s going to happen in the future? Well, tomorrow, or this week, or this year, I have no idea. But over the years it’s going to go up and up and up. And there’s going to be plenty of volatility along the way.
So don’t let the “downswing” of the yo-yo freak you out. It’s part of the plan. We were expecting it. It will happen again in the future. But just remember along with that gut wrenching yo-yo, we’re constantly marching up stairs as the revenues, growth, innovation, and profits of the world economy is constantly being pumped into the value of the market. You want to buy and hold to make sure you take advantage of that powerful wealth creation engine!
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.