Today’s Ups and Downs Won’t Define Your Future

In October 1994 Peter Lynch gave a commentary about the markets: “The markets will go up and the markets will go down. Human nature hasn’t changed much in 25,000 years. Some events will come out of left field and the market will go down or the market will go up. Volatility will occur and markets will continue to go up and down.” ⁽¹⁾

Lynch made the argument that corporate profits grow, on average, 8% per year and the stock market will double about every 9 years.

Was he right?

In 1994 the Dow Jones Index was at 3,800
In 2003: 7,600
2012: 15,200
2021: 30,400
On Nov 15^th, it closed at 43,445 – on pace for another doubling. ⁽²⁾

Thinking back to 1994, we’ve had 3 Democratic Presidents (Clinton, Obama, and Biden) and 2 Republican Presidents (Bush and Trump.) Markets were certainly volatile:

The Dot-com boom from 1995 – 2000 was a period of rapid, unsustainable increases in the market, only to be followed by a bust. ⁽³⁾
The Subprime Mortgage Crisis from 2007 – 2010 turned into the worst recession since the 1930’s. ⁽⁴⁾

It’s amazing to me that even with these two major financial events, the market still doubled!

President elect Trump has vowed for radical new change. Much of the country is happy about this and many are fearful of change. None of us can predict how this will affect our investments. No matter how you feel about the next four years, I think the best way to handle our investments is to make sure:

You have the emergency funds you need.
The income you need to pay your bills.
Money invested in the market for long term growth.

I encourage you to focus on the bigger picture and not your immediate feelings. If you would like a review of your investments, please do not hesitate to reach out. We’d love to help you.

Stay the course,
Barbara

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