Amid a period of scary viruses and social unrest, it’s time again for a reminder that the wise investor maintains a written long-term investment plan, then holds on tight and stays invested when markets are volatile. Despite everything, U.S. markets and the economy are showing remarkable hardiness. How is the US economy showing resiliency? Read on.
We experienced a nerve-wracking stock market correction in March 2020, with U.S. stocks declining about 33 percent. Since then, markets have come back strong. Stocks rose around 30 percent from mid-March to mid-June 2020, as measured by the S&P 500 large company index. Who could have guessed?
Then May brought surprisingly strong employment numbers as the economy gradually re-opened. The number of unemployed fell by 2.1 million, according to the Bureau of Labor Statistics. (Note: the bureau acknowledged misclassification of workers on temporary layoff in its reporting since March. While May’s unemployment rate remains high at 16.4 percent, it still represents a dramatic drop from April.)
It’s wise advice to remain calm and steady in challenging times. Doing so helps us endure and navigate the unpredictable. Investors, too, are often rewarded for staying calm in volatile markets.
“Emotions can have lasting consequences, and this is particularly true when you try to time the markets,” says Josh Hile, a Seattle-based investment analyst.
Perspective Financial clients have a clear, written, long-term investment plan, executed using broad diversification and reputable mutual funds. Rough times tend to be easier to get through, as a result.
Speaking of the U.S. economy – built on grit and a never-give-up spirit – allow me to share a book recommendation. Graham Moore’s The Last Days of Night is a historical novel about the invention of the light bulb and efficient electricity transmission. Featured in the story is the sometimes-nasty rivalry between Thomas Edison, George Westinghouse and Nikola Tesla. It’s an engaging read and wonderful break from every-day stress.
As Moore describes his work, “I love the notion that I could write something that two people could share. That’s the goal.”