Yo-Yo on an Escalator
The stock market has had a terrible start to 2016. As of today's close, the S&P 500 is down 9% year-to-date. Except for a day or two, the market has been bathed in red.
The constant declines in portfolio values are frustrating and unnerving. The onslaught has investors stuck in a dark place where pessimism reigns. The media doesn't help: there's only bad news and dour forecasts. Why even be an investor?!
Above, we zoom out on the first weeks of January and look at them in the context of the S&P since 1950. If you are steadfast in negativity mode, you might say: look at those steep drops in years past, it can get a lot worse! Hopefully, though, you are able to remember a more optimistic mindset: today's dips barely register in the big picture.
This chart reinforces a metaphor we often use: long-term investing is like a yo-yo on an escalator.