It’s no secret that the stock market has been exceedingly volatile lately.  You may be wondering how this volatility could affect you.  Should you sell?  Buy?  Worry?  Wait?

The best advice I can give you right now is this … don’t panic.

Hasty, speculative decisions aren’t advisable in any market.  While I am not able to predict the future, I am able to look back carefully at the history of Wall Street … and judging by that history, I expect the market is likely to rebound as it has so often in the past.

The market has certainly seen its share of turbulence through the years, and it often discovers its own remedy.  If you were around for Black Monday in 1987, you probably recall the widespread panic that followed.  But, you may also recall that in less than two years the market had sprung back, fully regaining the value it had lost by September of 1989.

Do you remember where the Dow was in 1982?  It was in the high 700s.  By the start of 2000, it had grown more than 1,500% to sit well above 11,000.  In 2003, the Dow was below 9,000; it is still well above that today.

Fluctuations and corrections happen, but the key is to retain long-term faith and stay invested through the turbulence.

Human nature often leads us to be slightly pessimistic, and when that happens, your instinct may be to go into self-preservation mode.  But consider your decisions before you act.  Will they actually help you to grow or preserve wealth?  Or could they someday work against you?

Consider this … while the market may be far down now, do you remember when it reached its all-time high?  You should – it was only a few weeks ago.

While the market dropped more than 340 points Thursday, it made almost all of it back in a couple of hours of late-afternoon trading to finish down by only 13 points.

This is the new Wall Street: the markets are capable of amazing rebounds, and amazing gains. 

I tend to encourage long-term investment strategies in order to help my clients achieve their goals.  When I say “long-term” I don’t mean just a few months, I mean several years.  So, if the market corrects itself within the next year or so, those who make hasty decisions to sell now may not fare as well as those with patience.

After all, more often than not it tends to be the long-term investor who sees the greatest accumulation of wealth in the long-run.  History has shown that timing the market is not the recipe for growth.  Instead, it is the time you spend in the market.

Since the mid-1920s, the stock market has posted annual gains about 70% of the time (58 out of the last 81 years).  In fact, as is often noted, if you had been out of the market on the S&P 500’s top five best-performing days since 1980, you would have a portfolio worth about 25% less than if you had stayed fully invested, and if you had missed the S&P 500’s best 30 days, you would have a portfolio worth nearly 75% less.

Returning once more to the teachings of Benjamin Graham as he recounted how the sages of old had boiled down the history of mortal affairs into a single phrase, we too have found solace in continually reminding ourselves that “this too shall pass.”  We are optimistic that the promise of change called for by our new leaders will manifest itself in, among many things, a renewed faith that our economic system and its creative expressions of human achievement that once made us the envy of the world.

Stay the course.

Second-guessing your financial plan now might not be advisable.  And while I wholly support my clients keeping an eye on the market, it’s important to fully understand the news and information before acting on it.

Gaining perspective during these uncertain times helps to rebuild our confidence.